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| Author: | Shi, S. |
| Title: | A directed search model of inequality with heterogenous skills and skill-biased technology |
| Journal: | Review of Economic Studies
2002 : APR, VOL. 69:2(239), p. 467-491 |
| Index terms: | Inequality Search problem Skills Technology |
| Language: | eng |
| Abstract: | In this paper the author analyses the directed search/matching problem in an economy with heterogenous skills and skill-biased technology. A unique symmetric equilibrium exists and is socially efficient. Matching is partially mixed in the equilibrium. A high-tech firm receives both skilled and unskilled applicants with positive probability, and favours skilled workers, while a low-tech firm receives only unskilled applicants. The model generates wage inequality among identical unskilled workers, as well as between-skill inequality, despite the fact that all unskilled workers perform the same task and have the same productivity in the two types of firms. |
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