Skill-biased technological change and endogenous benefits: the dynamics of unemployment and wage inequality

submitted by: TandF
In this article, we study the effect of skill-biased technological change on unemployment and wage inequality in the presence of a link between social benefits and average income. In this case, an increase in the productivity of skilled workers, and hence their wage, leads to an increase in average income and hence in benefits. The increased fallback income, in turn, makes unskilled workers ask for higher wages. As higher wages are not justified by corresponding productivity increases,...
Authors: Matthias Weiss, Alfred Garlof