Low-Skilled Unemployment, Biased Technological Shocks and Job Competition

Olivier Pierrard and Henri Sneessens

No 784, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: 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)
Pages: 32 pages
Date: 2003-05
New Economics Papers: this item is included in nep-lab and nep-ltv
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

Published - revised version published as "Biased Technological Shocks, Relative Wage Rigidities and Low-Skilled Unemployment”in Scottish Journal of Political Economy, 2008, 55(3), 330-352

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Working Paper: Low-Skilled Unemployment, Biased Technological Shocks and Job Competition (2002)
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