A Matching Model with Endogenous Skill Requirements

33 Pages Posted: 28 Aug 2000

See all articles by James Albrecht

James Albrecht

Georgetown University - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute); IZA Institute of Labor Economics

Susan Vroman

Georgetown University; IZA Institute of Labor Economics

Multiple version iconThere are 2 versions of this paper

Date Written: January 2000

Abstract

In this paper, we construct a model that focuses on the role of skill in the labor market. 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 do, 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. The model has the property that skill-biased technical change, i.e., an increase in the productivity of the high-skill jobs, leads to an increase in wage inequality both within and across worker types.

Keywords: skills, matching, wages, unemployment

JEL Classification: J64, E24

Suggested Citation

Albrecht, James W. and Vroman, Susan B., A Matching Model with Endogenous Skill Requirements (January 2000). Available at SSRN: https://ssrn.com/abstract=233308 or http://dx.doi.org/10.2139/ssrn.233308

James W. Albrecht (Contact Author)

Georgetown University - Department of Economics ( email )

Washington, DC 20057
United States
202-687-6105 (Phone)
202-687-6102 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Susan B. Vroman

Georgetown University ( email )

Washington, DC 20057
United States
202-687-6024 (Phone)
202-687-6102 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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