Working Paper: CEPR ID: DP689
Authors: Gilles Saint-Paul
Abstract: This paper develops a matching model of the labour market under wage rigidity when hiring decisions are irreversible. There are two types of workers, the skilled and the unskilled. The model is used to analyse whether technological advances may have increased unemployment, and shows that this is likely to occur if technological change is associated with an increase in the productivity and/or the supply of skilled relative to unskilled workers. These effects are stronger when hiring decisions are more irreversible.
Keywords: unemployment; productivity; dual labour markets; matching
JEL Codes: E24; J21; J31; J63
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Relative productivity of skilled workers (J24) | Unskilled unemployment rate (F66) |
| Relative productivity of skilled workers (J24) | Skilled unemployment rate (J64) |
| Relative productivity of skilled workers (J24) | Aggregate unemployment (J64) |
| Proportion of skilled workers (J24) | Unskilled unemployment rate (F66) |
| Proportion of skilled workers (J24) | Skilled unemployment rate (J64) |
| Technological advances (O33) | Unemployment of unskilled workers (F66) |
| Technological advances (O33) | Supply of skilled workers (J24) |