Involuntary Unemployment Relative to Simple Jobs in a Competitive Labor Market

Kiyoshi Otani

International Economic Review, 1991, vol. 32, issue 1, 85-102

Abstract: This paper accounts for involuntary unemployment, distinguishing between workers with and without the firm-specific skills and also recognizing the presence of simple jobs without skill requirements. By contrast to the current literature, and in particular the insider-outsider model, workers without the skills are unemployed in the paper (1) although their market is competitive; (2) not with regard to jobs and skill requirements, but simple jobs; and (3) not because of costs unrelated to productivity, but the training cost of the firm-specific skills, a cost intrinsic to productivity. The model in the paper accords well with the practice of bumping and seniority. Copyright 1991 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Date: 1991
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