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http://hdl.handle.net/10419/24384
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| Title: | | Wage divergence and unemployment: the impact of insider power and training costs  |
| Authors: | | Muysken, Joan Zwick, Thomas |
| Issue Date: | | 2000 |
| Series/Report no.: | | ZEW Discussion Papers 00-37 |
| Abstract: | | The US labour market is characterized by a high skill wage mark-up and low unemployment, while the German labour market has a low skill wage mark-up and a high, mainly unskilled unemployment rate. This paper adds an innovative labour supply explanation to the discussion how these distinct labour market equilibria could arise. Skill-biased technological change induces training needs for the employees willing to work in the skilled labour market and increases relative skill demand. In a simple general equilibrium model, this paper shows that skilled insiders in the USA enjoy higher rents and increase the skilled wage mark-up stronger than in Germany in the wake of skill-biased technological change. The reason is that the unskilled outsiders in the USA do not possess a powerful credible threat to improve their position. This is a consequence from higher training and education costs in the USA for unskilled employees and unemployed. In Germany, the lower skill wage mark-up leads to an increased relative skill demand which is not matched by the skill supply and therefore mis-match unemployment arises. |
| Subjects: | | Mis-match unemployment training costs skill biased technological change Labour supply |
| JEL: | | O33 J31 J24 |
| Document Type: | | Working Paper |
| Appears in Collections: | | Publikationen von Forscherinnen und Forschern des ZEW ZEW Discussion Papers
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