NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Changes in Unemployment and Wage Inequality: An Alternative Theory and Some Evidence

Daron Acemoglu

NBER Working Paper No. 6658
Issued in July 1998
NBER Program(s):   LS

This paper offers a model where firms decide what types of jobs to create and then search for suitable workers. When there are few skilled workers and the productivity gap between the skilled and the unskilled is small, firms create a single type of job and recruit all workers. An increase in the proportion of skilled workers or skill-biased technical change can create a qualitative change in the composition of jobs, increasing the demand for skills, wage inequality, and the unemployment rates for both groups. The paper provides some evidence that there has been a change in the composition of jobs in the U.S. during the past two decades.

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Document Object Identifier (DOI): 10.3386/w6658

Published: Acemoglu, Daron. "Changes In Unemployment And Wage Inequality: An Alternative Theory And Some Evidence," American Economic Review, 1999, v89(5,Dec), 1259-1278.

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