A Matching Model with Endogenous Skill Requirements
Georgetown University - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute for Economic Research); Institute for the Study of Labor (IZA)
Georgetown University; Institute for the Study of Labor (IZA)
International Economic Review, Vol. 43, pp. 283-305, 2002
We consider a labor market in which workers differ in their abilities and jobs differ in their skill requirements. The distribution of worker abilities is exogenous, but we model the choice of skill requirements by firms. High-skill jobs produce more output than low-skill jobs, but high-skill jobs require high-skill workers and thus are more difficult to fill. We use a matching model together with a Nash bargaining approach to wage setting to determine the equilibrium mix of job types, along with the equilibrium relationship between worker and job characteristics, wages, and unemployment.
Number of Pages in PDF File: 23Accepted Paper Series
Date posted: May 16, 2002
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