Supply and Demand Responses to Skill-Biased Technical Change: a Matching Approach with Heterogenous Workers

Olivier Charlot and B. Decreuse

G.R.E.Q.A.M. from Universite Aix-Marseille III

Abstract: We consider the labour market implications of skill decay. State dependence in individual hazards emerges from the joint result of (optimal) hiring and search behaviours. We shed light on an original externality according to which firms' profits increase with the valuation of vacancies. Consequently, there can be multiple equilibria, those of which displaying the longest duration of employability also entail the least search efforts. Policies aimed at reducing long-term unemployment generally discourage search efforts, so that their results are ambiguous.

Keywords: PUBLIC POLICY; BEHAVIOUR; EXTERNALITIES (search for similar items in EconPapers)
JEL-codes: J38 J64 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2000
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Persistent link: https://EconPapers.repec.org/RePEc:fth:aixmeq:00a14

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