Changes in Unemployment and Wage Inequality: An Alternative Theory and Some Evidence
- (pp. 1259-1278)
AbstractI present a model where firms decide what types of jobs to create and then search for suitable workers. When there are few skilled workers and the skilled-unskilled productivity gap is small, firms create a single type of job and recruit all workers. An increase in the proportion of skilled workers or skill-biased technical change can create a qualitative change in the composition of jobs, increasing the demand for skills, wage inequality, and unemployment. I provide some evidence that there has been a change in the composition of jobs in the United States during the past two decades.
Citation1999. "Changes in Unemployment and Wage Inequality: An Alternative Theory and Some Evidence." American Economic Review, 89(5): 1259-1278. DOI: 10.1257/aer.89.5.1259
- J64 Unemployment: Models, Duration, Incidence, and Job Search
- J31 Wage Level and Structure; Wage Differentials
- J23 Labor Demand