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Low-skilled unemployment, capital-skill complementarity and embodied technical progress*

Published online by Cambridge University Press:  17 August 2016

E. Moreno-Galbis  and
H.R. Sneessens
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Summary

Models developed by recent economic literature do not manage to account simultaneously for the three main stylized facts observed in many EU countries since the mid-seventies: (i) the increase in the overall unemployment rate; (ii) the difference between high-skilled and low-skilled unemployment; (iii) the stability of relative wages. This paper focuses on these issues. We construct an intertemporal general equilibrium model seeking to reproduce these facts. We consider two types of jobs and two types of workers. We allow for job competition between high- and low-skilled workers on the low-skilled segment of the labor market and for on-the-job search. Matching processes are represented by matching functions á la Pissarides. Low-skilled search intensities are endogenous and high-skilled workers decide on the amount of effort they devote to search in each labor market segment. Biased technological change is introduced via embodied technical progress and capital- skill complementarity. The model is calibrated and simulated to evaluate the impact of various types of shocks. The model reproduces quite well the unemployment rate changes and the relative wage stability observed over the past two decades.

Résumé

Résumé

La plupart des modèles développés par la littérature économique récente, ne réussissent pas à prendre simultanément en considération les trois faits stylisés qui ont caractérisé les économies européennes depuis la deuxième mitant des années soixante-dix : i) la hausse du taux de chômage agrégé, ii) la divergence entre les taux de chômage des travailleurs qualifiés et non qualifiés et iii) la stabilité des salaires relatifs. Nous proposons un modèle d'équilibre général intertemporel visant à la reproduction de ces faits. On distingue deux types de postes de travail et deux types de travailleurs. Les travailleurs qualifiés sont en concurrence avec les non qualifiés sur le segment du marché des emplois non qualifiés (emplois simples). Parallèlement les travailleurs qualifiés occupant ces postes simples peuvent continuer à chercher un autre poste de travail pendant leur temps libre. Le processus d'appariement entre firmes et travailleurs est représenté par des fonctions à la Pissarides. L'intensité de recherche d'emploi des travailleurs non qualifiés est endogène et les travailleurs qualifiés décident la quantité d'effort qu'ils consacrent à la recherche d'un emploi sur chaque marché. Le changement technologique biaisé est introduit via le progrès technologique incorporé et la relation de complémentarité entre les nouvelles technologies et le travail qualifié. Le modèle est échelonnée et simulé afin d'évaluer l'impact de différent types de chocs. Le modèle reproduit de façon satisfaisante l'évolution des taux de chômage et la rigidité salariale observées pendant les dernières décennies.

Keywords

skill mismatchequilibrium unemploymentskill biased technological progressladder effectmacro dynamicsE24J21J23inadaptation des compétenceschômage d'équilibreprogrès technolo-gique biaisé en faveur du chômage qualifiéeffet d'évictiondynamique macroéconomiqueE24J21J23
Type
Research Article
Information
Recherches Économiques de Louvain/ Louvain Economic Review , Volume 73 , Issue 3 , 2007 , pp. 241 - 272
Copyright
Copyright © Université catholique de Louvain, Institut de recherches économiques et sociales 2007 

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Footnotes

***

H.R. Sneessens is Professor of Economics at the Université Catholique de Louvain and Université Catholique de Lille.

*

We would like to thank seminar participants at the IZA Summer School 2003, Jamboree 2003 (Pompeu Fabra University) and two anonymous referees. We are especially indebted to Francois Langot for very useful suggestions. Any remaining errors are ours.

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