American Economic Review Vol. 89 No. 5 1999
Changes in Unemployment and Wage Inequality: An Alternative Theory and Some Evidence
Abstract
I 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.
- DOI
- 10.1257/aer.89.5.1259
- Volume
- 89
- Issue
- 5
- Pages
- 1259-1278
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref