Working Paper: CEPR ID: DP4094
Authors: Juan José Dolado; Marcel Jansen; Juan Francisco Jimeno Serrano
Abstract: This paper considers a matching model with heterogeneous jobs (unskilled and skilled) and workers (low- and high-educated) which allows for on-the-job search by mismatched workers. The latter are high-educated workers who transitorily accept unskilled jobs and continue to search for skilled jobs. Our findings show that on-the-job search introduces an additional source of between- and within-group wage inequality. Furthermore, the higher quit rate of mismatched workers exerts a negative externality on unskilled jobs and weakens the labour market position of low-educated workers. This last feature changes the effects of skill-biased technological change and it alters the response of the labour market to shifts in the skill distribution.
Keywords: job search; skills; unemployment; wage inequality
JEL Codes: J63; J64
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| on-the-job search (J68) | higher quit rates for mismatched workers (J63) |
| higher quit rates for mismatched workers (J63) | negative effects on labor market position of low-educated workers (F66) |
| on-the-job search (J68) | wage inequality (J31) |
| mismatched high-educated workers (J69) | lower wages than low-educated workers (J31) |
| skill-biased technological change (J24) | increased unemployment rates among low-educated workers (F66) |
| skill-biased technological change (J24) | ambiguous effects on supply of skilled jobs (F66) |