Abstract
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 language | English |
|---|---|
| Pages (from-to) | 1-12 |
| Journal | De Economist |
| Volume | 149 |
| Issue number | 1 |
| DOIs | |
| Publication status | Published - 1 Jan 2001 |