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Title:Low skill but high volatility? PDF Logo
Authors:Buch, Claudia M.
Pierdzioch, Christian
Issue Date:2009
Series/Report no.:CESifo working paper 2665
Abstract:Globalization may impose a double-burden on low-skilled workers. On the one hand, the relative supply of low-skilled labor increases. This suppresses wages of low-skilled workers and/or increases their unemployment rates. On the other hand, low-skilled workers typically face more limited access to financial markets than high-skilled workers. This limits their ability to smooth shocks to income intertemporally and to share risks across borders. Using cross-country, industry-level data for the years 1970 - 2004, we document how the volatility of hours worked and of wages of workers at different skill levels has changed over time. We develop a stylized theoretical model that is consistent with the empirical evidence, and we test the predictions of the model. Our results show that greater financial globalization and development increases the volatility of employment, and this effect is strongest for low-skilled workers. A higher share of low-skilled employment has a dampening impact.
Subjects:labor-market volatility
skill levels
financial globalization
JEL:F41
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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