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Real Wages, Skill Mismatch and Unemployment Persistence (FRANCE, 1962-1989)

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  • Henri R. Sneessens
  • Fatemeh Shadman-Mehta

Abstract

We develop a model of equilibrium unemployment with endogenous real wages and productivity. We use a framework with explicit quantity constraints and aggregation over micromarkets to derive a Beveridge curve and discuss the relationship between shifts in the Beveridge curve and equilibrium unemployment. We also distinguish skilled and unskilled labor, so that shifts in the aggregate UV-curve can be the outcome of either frictions on the skilled labor market or skill mismatch. Frictions are assumed to be exogenous and are estimated by a linear trend. Skill mismatch is endogenous and depends, a.o., on the skilled/unskilled relative wage. There is a tight relationship and interaction between skill mismatch and equilibrium unemployment. We estimate the model on French annual data, over the period 1962-89. We exploit these results to propose tentative explanations of observed unemployment rises and Beveridge curve shifts, and to discuss a few economic policy options.

Suggested Citation

  • Henri R. Sneessens & Fatemeh Shadman-Mehta, 1995. "Real Wages, Skill Mismatch and Unemployment Persistence (FRANCE, 1962-1989)," Annals of Economics and Statistics, GENES, issue 37-38, pages 255-292.
    • Handle: RePEc:adr:anecst:y:1995:i:37-38:p:255-292
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    Cited by:

    1. Cockx, Bart & Van der Linden, Bruno & Karaa, Adel, 1998. "Active Labour Market Policies and Job Tenure," Oxford Economic Papers, Oxford University Press, vol. 50(4), pages 685-708, October.
    2. Plassard, Romain & Renault, Matthieu, 2023. "General equilibrium models with rationing: The making of a ‘European specialty’," European Economic Review, Elsevier, vol. 159(C).
    3. repec:ebl:ecbull:v:30:y:2010:i:1:p:374-382 is not listed on IDEAS
    4. Jürgen Wiemers, 2010. "A Comment on "The consequences of the minimum wage when other wages are bargained over"," Economics Bulletin, AccessEcon, vol. 30(1), pages 374-382.
    5. Cahuc, P. & Saint-Martin, A. & Zylberberg, A., 2001. "The consequences of the minimum wage when other wages are bargained over," European Economic Review, Elsevier, vol. 45(2), pages 337-352, February.

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