A Matching Model with Endogenous Skill Requirements

James Albrecht and Susan Vroman

International Economic Review, 2002, vol. 43, issue 1, 283-305

Abstract: We consider a labor market in which workers differ in their abilities and jobs differ in their skill requirements. The distribution of worker abilities is exogenous, but we model the choice of skill requirements by firms. High-skill jobs produce more output than low-skill jobs, but high-skill jobs require high-skill workers and thus are more difficult to fill. We use a matching model together with a Nash bargaining approach to wage setting to determine the equilibrium mix of job types, along with the equilibrium relationship between worker and job characteristics, wages, and unemployment. Copyright 2002 by the Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Resarch Association

Date: 2002
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