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| Author: | Saint-Paul, G. |
| Title: | Unemployment and increasing private returns to human capital |
| Journal: | Journal of Public Economics
1996 : JUL, VOL. 61:1, p. 1-20 |
| Index terms: | UNEMPLOYMENT EDUCATION SKILLS |
| Language: | eng |
| Abstract: | This paper studies a model of human capital accumulation with real wage rigidity. It is shown that the arbitrage condition between hiring a skilled vs. an unskilled worker may be started as a positive relationship between their relative unemployment rates. It may be the case that this locus is steep enough to generate increasing returns to education. This may lead to multiple equilibria: a high-education equilibrium may co-exist with a low-education equilibrium. In the former, the unskilled are more exposed to unemployment relative to the skilled, as compared with the latter. |
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