Wage Divergence and Asymmetries in Unemployment in a Model with Biased Technical Change

J. Muysken*, M.W.J.L. Sanders, A.H. van Zon

*Corresponding author for this work

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In an attempt to explain the different wage and unemployment responses in mainland europe and the us to a fall in demand for low-skilled labour, we present a model with two levels of skills and two classes of goods. We analyse the response to skill-biased technical change in two distinct labour market regimes. A trade-off between wage divergence and unemployment of skilled and unskilled workers occurs. Skill-biased technical change turns out to have a different impact in both regimes, due to a different working of the chimney effect.
Original languageEnglish
Pages (from-to)1-12
JournalDe Economist
Issue number1
Publication statusPublished - 1 Jan 2001

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