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Skilled Labor Reallocation, Wage Inequality, and Unskilled Unemployment

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  • Volker Grossmann

Abstract

This paper analyzes the labor market effects of an increase in incetives in raising total factor productivity and, thus, reallocating high-skilled labor from production to non-production (i.e., R&D) activities. Within an endogenous growth framework, it is shown that such a reallocation of skilled labor depresses the demand for low-skilled labor. Contrary to the standard view of skill-biased technological change, the relative marginal prductivity of labor changes only because of relative employment effects. Moreover, the impact of social comparisons between high-skilled and low-skilled workers and within the group of low-skilled workers are examined.

Suggested Citation

  • Volker Grossmann, 2000. "Skilled Labor Reallocation, Wage Inequality, and Unskilled Unemployment," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 156(3), pages 473-473, September.
    • Handle: RePEc:mhr:jinste:urn:sici:0932-4569(200009)156:3_473:slrwia_2.0.tx_2-d
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    Cited by:

    1. Volker Grossmann, 2005. "White-collar employment, inequality, and technological change," Journal of Economics, Springer, vol. 10(1), pages 119-142, December.
    2. Hartmut Egger & Udo Kreickemeier, 2017. "International Fragmentation: Boon or Bane for Domestic Employment?," World Scientific Book Chapters, in: International Trade and Labor Markets Welfare, Inequality and Unemployment, chapter 9, pages 237-263, World Scientific Publishing Co. Pte. Ltd..

    More about this item

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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