Kiel Working Papers, Kiel Institute for World Economics
No 914:
Whodunnit? Changes in the Relative Demand for Unskilled and Skilled Labor
Axel Schimmelpfennig
Abstract: The secular shift in labor demand from unskilled to
skilled labor is explained within a model that is solved numerically. There
are three branches producing a basic good, a differentiated luxury good,
and an intermediate service. Production is more skill-intensive in the
luxury good and the service branch. Consumption expenditure shifts towards
the luxury good with rising income. In this setting, both
unskilled-specific and neutral technical change lead to a rise in the
relative wage of the skilled. Increasing unemployment results only for a
restrictive assumption about labor market rigidities.
Keywords: Skill-biased technical change, wages, unemployment; (follow links to similar papers)
JEL-Codes: E24; J21; J31; (follow links to similar papers)
56 pages, February 1999
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