Skill Asymmetries, Increasing Wage Inequality and Unemployment

Paul Auerbach () and Peter Skott ()
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Peter Skott: Department of Economics, University of Aarhus, Denmark, Postal: 8000 Aarhus C, Denmark

Economics Working Papers from Department of Economics and Business Economics, Aarhus University

Abstract: Using a simple model with two levels of skill, we assume that high-skill workers who fail to get high-skill jobs may accept low-skill positions; low-skill workers do not have the analogous option of filling high-skill positions. This asymmetry implies that a slowdown in Hicks-neutral technical change (or other adverse, skill-neutral shocks) may cause an increase in wage inequality, both between and within skill categories, as well as an increase in unemployment, especially among low-skill workers. Movements in productivity, unemployment and inequality may thus be linked to induced overeducation and credentialism.

Keywords: Wage inequality; unemployment; skill-bias; Hicks-neutral technical change; overeducation; credentialism (search for similar items in EconPapers)
JEL-codes: E24 E25 J31 O33 (search for similar items in EconPapers)
Pages: 34
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Citations: View citations in EconPapers (6)

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Working Paper: Skill asymmetries, increasing wage inequality and unemployment (2000)
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Persistent link: https://EconPapers.repec.org/RePEc:aah:aarhec:2000-18

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