Employment inequality: Why do the low-skilled work less now?

Erin Wolcott

Journal of Monetary Economics, 2021, vol. 118, issue C, 161-177

Abstract: Low-skilled prime-age men are less likely to be employed than high-skilled prime-age men, and the differential has increased since the 1970s. I build a search model encompassing three explanations: (1) automation and trade reduced the demand for low-skilled workers; (2) health, welfare, and recreational gaming/computer technology reduced the supply of low-skilled workers; and (3) factors affecting job search, such as online job boards, reduced frictions for high-skilled workers. I find a shift in demand away from low-skilled workers was the leading cause, a shift in supply had little effect, and search frictions actually reduced employment inequality.

Keywords: Inequality; Employment; Search model; Labor market tightness (search for similar items in EconPapers)
JEL-codes: E24 J20 J64 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

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Working Paper: Employment Inequality: Why Do the Low-Skilled Work Less Now? (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:118:y:2021:i:c:p:161-177

DOI: 10.1016/j.jmoneco.2020.09.004

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