Frictions or deadlocks? Job polarization with search and matching frictions

Julien Albertini, Jean-Olivier Hairault, Francois Langot and Thepthida Sopraseuth

No 2015-051, SFB 649 Discussion Papers from Humboldt University Berlin, Collaborative Research Center 649: Economic Risk

Abstract: This paper extends Pissarides (1990)'s matching model by considering two sectors (routine and manual) and workers' occupational choices, in the context of skill-biased demand shifts, to the detriment of routine jobs and in favour of manual jobs because of technological changes. The theoretical challenge is to investigate the reallocation process from the middle towards the bottom of the wage distribution. By using this framework, we shed light on the way in which labour market institutions affect the job polarization observed in the United States and Europe. The results of our quantitative experiments suggest that search frictions have non-trivial effects on the reallocation process and transitional dynamics of aggregate employment.

Keywords: search and matching; job polarization; reallocation; labor market institutions (search for similar items in EconPapers)
JEL-codes: E24 J62 J64 O33 (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:sfb649:sfb649dp2015-051

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