Changes in Unemployment and Wage Inequality: An Alternative Theory and Some Evidence
No 1459, CEPR Discussion Papers from C.E.P.R. Discussion Papers
This paper offers an alternative theory for the increase in unemployment and wage inequality experienced in the United States over the past two decades. In my model firms decide the composition of jobs and then match with skilled and unskilled workers. The demand for skills is endogenous and an increase in the proportion of skilled workers or their productivity can change the nature of equilibrium such that firms start creating separate jobs for the skilled and the unskilled. Such a change increases skilled wages, reduces unskilled wages and increases the unemployment rate of both skilled and unskilled workers. Although skilled workers are better-off as a result of this change, total social surplus can decrease. A testable implication which distinguishes this theory from others is derived and some evidence in support of this implication is provided.
Keywords: Job Structure; Matching; Search; Unemployment; Wage Inequality (search for similar items in EconPapers)
JEL-codes: E24 J31 J64 (search for similar items in EconPapers)
References: Add references at CitEc
Citations View citations in EconPapers (26) Track citations by RSS feed
Downloads: (external link)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at email@example.com
Journal Article: Changes in Unemployment and Wage Inequality: An Alternative Theory and Some Evidence (1999)
Working Paper: Changes in Unemployment and Wage Inequality: An Alternative Theory and Some Evidence (1998)
Working Paper: Changes in Unemployment and Wage Inequality: An Alternative Theory and Some Evidence (1996)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: /RePEc:cpr:ceprdp:1459
Ordering information: This working paper can be ordered from
http://www.cepr.org/ ... ers/dp.php?dpno=1459
Access Statistics for this paper
More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers
Address: Centre for Economic Policy Research, 77 Bastwick Street, London EC1V 3PZ.
Series data maintained by ().