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Distributional consequences of neutral shocks to economic activity in a model with efficiency wages and overeducation

Author

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  • Skott, Peter

    (Department of Economics, University of Aarhus, Denmark)

Abstract

This paper shows that the existence and persistence of `overeducation' can be explained by a simple extension of the efficiency wage model. When calibrated to fit the amounts of overeducation found in most empirical studies, the model implies that both the relative wage and the relative employment rate of high-skill workers will depend inversely on the aggregate level of activity. The model may help explain the patterns of rising wage inequality that have been observed in many countries since the early 1970s.

Suggested Citation

  • Skott, Peter, "undated". "Distributional consequences of neutral shocks to economic activity in a model with efficiency wages and overeducation," Economics Working Papers 2003-5, Department of Economics and Business Economics, Aarhus University.
    • Handle: RePEc:aah:aarhec:2003-5
    as

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    File URL: https://repec.econ.au.dk/repec/afn/wp/03/wp03_05.pdf
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    Citations

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    Cited by:

    1. Galasi, Péter, 2004. "Túlképzés, alulképzés és bérhozam a magyar munkaerőpiacon, 1994-2002 [Over-education, under-education and wage premiums on the Hungarian labour market, 1994-2002]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(5), pages 449-471.
    2. Skott, Peter & Auerbach, Paul, 2003. "Wage inequality and skill asymmetries," Economics Discussion Papers 2003-7, School of Economics, Kingston University London.
    3. Skott, Peter, 2005. "Fairness as a source of hysteresis in employment and relative wages," Journal of Economic Behavior & Organization, Elsevier, vol. 57(3), pages 305-331, July.

    More about this item

    Keywords

    Wage ineqality; overeducation; efficiency wages.;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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