Unskilled Workers in an Economy with Skill-Biased Technology

Shouyong Shi

No 73, Cahiers de recherche CREFE / CREFE Working Papers from CREFE, Université du Québec à Montréal

Abstract: This paper contributes to the search theory of unemployment by endogenously generating matching functions for skilled and unskilled workers from a wage-posting game. The model is capable of producing a positive skill premium and a positive wage differential among homogeneous unskilled workers. The skill premium arises from a skill-biased technology; the wage differential among unskilled workers sustains because a lower wage is compensated by a higher chance of getting the job. The model provides useful explanations for the observed dynamic patterns of within-skill and between-skill wage differentials in the 1970s and 1980s and for the relative cyclical volatility of hours of work by different skill groups of workers.

Ce papier contribue à la théorie ``search'' du chômage par la génération endogène de fonctions d'appariement pour des travailleurs qualifiés et non-qualifiés dans un jeu d'affichage de salaire. Le modèle est capable de produire une prime de qualification positive ainsi qu'un différentiel de salaire positif entre les travailleurs homogènes non qualifiés. La prime de qualification apparaît en raison d'une technologie biaisée par les qualifications; le différentiel de salaire parmi les travailleurs non qualifiés trouve son origine dans un salaire plus faible compensé par une plus forte probabilité d'obtenir l'emploi. Le modèle offre des explications utiles pour l'évolution observée des différentiels de salaire à l'intérieur des classes de qualifications et entre elles durant les années 1970 et 1980 ainsi que pour la variabilité relative des heures de travail des différents groupes à travers le cycle.

Keywords: Wage-posting; Wage differentials; Skill-biased technology (search for similar items in EconPapers)
JEL-codes: C78 J31 J64 (search for similar items in EconPapers)
Pages: 44 pages
Date: 1998-07
New Economics Papers: this item is included in nep-dge and nep-ltv
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Unskilled workers in an economy with skill-biased technology (1999)
Working Paper: Unskilled Workers In An Economy With Skill-biased Technology (1999)
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