Skilled Labor Reallocation, Wage Inequality, and Unskilled Unemployment

Grossmann, Volker

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Journal article

Skilled Labor Reallocation, Wage Inequality, and Unskilled Unemployment

BP2-STS

Grossmann, Volker ORCID University of Zurich

2000

Published in:

Journal of Institutional and Theoretical Economics. - Mohr Siebeck GmbH & Co. KG. - 2000, vol. 6, p. 473-500

English This paper analyzes the labor market effects of an increase in incentives 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 productivity 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 worker are examied.

Faculty

Faculté des sciences économiques et sociales et du management

Department

Département d'économie politique

Language