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Real Wages, Skill Mismatch and Unemployment Persistence

Author

Listed:
  • SNEESSENS, Henri R.

    (IRES, Departement des Sciences Economiques, Universite catholique de Louvain)

  • SHADMAN-MEHTA, Fatemeh

    (IRES, Departement des Sciences Economiques, Universite catholique de Louvain)

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

  • SNEESSENS, Henri R. & SHADMAN-MEHTA, Fatemeh, 1994. "Real Wages, Skill Mismatch and Unemployment Persistence," LIDAM Discussion Papers CORE 1994050, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvco:1994050
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    File URL: https://sites.uclouvain.be/core/publications/coredp/coredp1994.html
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    Citations

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    Cited by:

    1. Nicolas CARNOT & Alain QUINET, 2003. "Enrichissement de la croissance en emploi et productivité," Discussion Papers (REL - Recherches Economiques de Louvain) 2003014, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    2. Éric Heyer & Xavier Timbeau, 2000. "35 heures : réduction réduite," Revue de l'OFCE, Programme National Persée, vol. 74(1), pages 53-95.
    3. de la Croix, David, 1994. "Wage Interdependence through Decentralized Bargaining," Journal of Economic Surveys, Wiley Blackwell, vol. 8(4), pages 371-403, December.
    4. Nicolas Carnot & Alain Quinet, 2003. "Enrichissement de la croissance en emploi et productivité," Recherches économiques de Louvain, De Boeck Université, vol. 69(1), pages 97-118.
    5. 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.
    6. repec:spo:wpmain:info:hdl:2441/1646 is not listed on IDEAS
    7. repec:spo:wpecon:info:hdl:2441/1646 is not listed on IDEAS
    8. repec:hal:wpspec:info:hdl:2441/1646 is not listed on IDEAS
    9. repec:hal:spmain:info:hdl:2441/1646 is not listed on IDEAS
    10. Falk, Martin & Koebel, Bertrand M., 1997. "The Demand of Heterogeneous Labour in Germany," ZEW Discussion Papers 97-28, ZEW - Leibniz Centre for European Economic Research.
    11. Saint-Paul, Gilles, 1996. "Unemployment and increasing private returns to human capital," Journal of Public Economics, Elsevier, vol. 61(1), pages 1-20, July.
    12. repec:ebl:ecbull:v:30:y:2010:i:1:p:374-382 is not listed on IDEAS
    13. Gregg, Paul & Manning, Alan, 1997. "Skill-biassed change, unemployment and wage inequality," European Economic Review, Elsevier, vol. 41(6), pages 1173-1200, June.

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