This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
References
An introductory survey of search and matching models in Cahuc and Zylberberg (2004), whereas the most detailed one can be found in the book by Pissarides (2000).
Two recent studies by Gautier (2002) and Pierrard and Sneessens (2003) extend this assumption and allow high-skilled workers to apply for low-skilled jobs. As we will show in chapters 5 and 6 below, the assumption of separated labor markets does not stand in the way of the replication of the results of Pierrard and Sneessens (2003).
As in the literature, the above described decision processes are discussed by solving the respective Bellman equations. A detailed discussion of investment processes under uncertainty by using the Bellman equation can be found, for example, in Dixit and Pindyck (1994), p. 95 f.
The zero-profit conditions follows from the fact that in equilibrium firms exploit all profit opportunities from creating new jobs, which drives the respective rents to zero (cf. Pissarides (2000) p. 11).
Note that this relationship is determined by the assumption that the matching function is linear homogeneous; then the probability a vacant job becomes filled in the next period is given by: \( M_i \left( \cdot \right)/v_i = q_i \left( {\theta _i } \right) = M\left( {\frac{{u_i }} {{v_i }},1} \right) \) . A detailed survey of the matching function can be found, for example, in Petrongolo and Pissarides (2001).
In general, the analysis outlined in this section could easily be extended to aspects concerning firing costs, employment protection, as, for example, described by Pissarides (2001). The importance of firing costs is, for example, studied by Saint-Paul (1996), chap. 9, or by Kohns (2000). See also chapter 6 for a discussion of labor market policies within a dynamic general equilibrium framework.
See e.g. Heckman, Lochner, and Taber (1998) p. 26.
See, Greiner, Rubart, and Semmler (2004) p. 608.
Rights and permissions
Copyright information
© 2007 Springer-Verlag Berlin Heidelberg
About this chapter
Cite this chapter
(2007). Technological Change, the Labor Market, and Wage Inequality. In: The Employment Effects of Technological Change. Lecture Notes in Economics and Mathematical Systems, vol 593. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-540-69956-9_3
Download citation
DOI: https://doi.org/10.1007/978-3-540-69956-9_3
Publisher Name: Springer, Berlin, Heidelberg
Print ISBN: 978-3-540-69955-2
Online ISBN: 978-3-540-69956-9
eBook Packages: Business and EconomicsEconomics and Finance (R0)