Low-Skilled Unemployment, Biased Technological Shocks and Job Competition
Olivier Pierrard () and
Henri Sneessens ()
No 784, IZA Discussion Papers from Institute for the Study of Labor (IZA)
The unemployment rise in EU countries has been particularly strong for low-skilled workers. This observation has often been explained in terms of biased technical change and relative wage rigidities. More attention has been paid recently to an alternative mechanism, the crowding-out of low-skilled workers by over-qualified workers. The objective of this paper is both methodological and empirical. We construct a dynamic general equilibrium model with two types of jobs and two types of workers and with search unemployment. The model is calibrated and simulated to examine the interactions between the “skill bias” and “crowdingout” mechanisms. When such interactions are accounted for, the model reproduces quite well the observed unemployment changes.
Keywords: skill bias; crowding out; over-education; equilibrium search unemployment; ladder effect (search for similar items in EconPapers)
JEL-codes: E24 J21 J23 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-lab and nep-ltv
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Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp784
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