Technical skill bias as a response of firms to unemployment: A matching model with applicant ranking and endogenous skill requirements

Frédéric Gavrel

Labour Economics, 2009, vol. 16, issue 3, 304-310

Abstract: This paper considers an economy with heterogeneous workers where identical firms optimally decide on the degree of complexity of jobs. Meetings are depicted by an urn-ball process where firms rank their applicants and pick the best one. We show that a general rise in unemployment induces an increase in the employment shares of high-skilled workers which, in turn, makes firms choose more complex jobs, leading then to a decrease in the output of low-skilled workers. The technical skill bias is therefore related to the usual explanations of unemployment. Next, we state that a decentralized equilibrium is efficient in terms of job complexity but inefficient in terms of job creation when firms internalize the usual congestion effect. We then extend the analysis to a dynamic model.

Keywords: Endogenous; job; complexity; Applicant; ranking; Matching; Differentiation; of; skills; Wage; inequality; Labor; market; efficiency (search for similar items in EconPapers)
Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:labeco:v:16:y:2009:i:3:p:304-310

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