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In this paper, we study the effect of skill-biased technological change on unemployment when benefits are linked to the evolution of average income and when this is not the case. In the former 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 respective productivity increases, unemployment rises. More generally, we show that skill-biased technological change leads to increasing unemployment of the unskilled when benefits are endogenous. The model provides a theoretical explanation for diverging developments in wage inequality and unemployment under different social benefits regimes: Analyzing the social legislation in 14 countries, we find that benefits are linked to the evolution of average income in Continental Europe but not in the U.S. and the UK. Given this institutional difference, our model predicts that skill-biased technological change leads to rising unemployment in Continental Europe and rising wage inequality in the U.S. and the UK.

This paper considers training, mobility decisions and wages together to test for the specificity of human capital contained in continuing training courses. We empirically analyse the relationship between training, mobility and wages in two ways. First, we examine the correlation between training and mobility. In a second step, we consider wage effects of mobility taking training participation into account. First, we find that training participation is negatively correlated with the mobility decision and that training participation decreases the probability of individuals to change the job. Second, we find that wages are lower for job changers for the group of training participants, so wages decrease when trained individuals are mobile. Finally, training participation negatively affects the individuals's subjective valuation of the quality of their last job change. Taken together, these results suggest that there is some specific human capital, which is incorporated into training and lost when moving between jobs.

Equilibrium search theory suggests that the wage distribution in a cross section of workers is closely related to labor market transitions and associated wage changes. Accordingly, jobtojob transitions are central in explaining the wage distribution. This paper uses the IAB employment subsample to describe the empirics of labor market transitions and the wage structure in Germany. Motivated by search theory, we use the data to explore descriptively labor market transitions and features of the wage structure. We find that labor market transition rates vary substantially over the business cycle and with individual characteristics. Regarding jobtojob transitions, we find considerable wage changes. Most job changes involve considerable gains, but a number of individuals incurs a remarkable loss. Regarding the wage structure, we find strong effects of jobtojob transitions, age, and education on wage mobility. Based on our descriptive analysis, we conclude that indeed a close relationship exists between wages and labor market transitions as predicted by search theory. However, the noticeable share of wage losses following jobtojob changes contradicts a simple search theoretic perspective.

International audience ; In this paper, 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 respective productivity increases, unemployment rises. More generally, we show that skill-biased technological change leads to increasing unemployment of the unskilled and to a moderately increasing wage inequality when benefits are endogenous. The model provides a theoretical explanation for diverging dynamics in wage inequality and unemployment under different social benefits regimes: Analyzing the social legislation in 14 countries, we find that benefits are linked to the evolution of average income in Continental Europe but not in the U.S. and the UK. Given this institutional difference, our model predicts that skill-biased technological change leads to rising unemployment in Continental Europe and rising wage inequality in the U.S. and the UK.

In this paper, 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 respective
productivity increases, unemployment rises. More generally, we show
that skill-biased technological change leads to increasing
unemployment of the unskilled and to a moderately increasing wage
inequality when benefits are endogenous.
The model provides a theoretical explanation for diverging dynamics
in wage inequality and unemployment under different social benefits
regimes: Analyzing the social legislation in 14 countries, we find
that benefits are linked to the evolution of average income in
Continental Europe but not in the U.S. and the UK. Given this
institutional difference, our model predicts that skill-biased
technological change leads to rising unemployment in Continental
Europe and rising wage inequality in the U.S. and the UK.

ABSTRACTIt is commonplace in the debate on Germany's labor market problems to argue that low wage dispersion is a major reason for the high unemployment rate. This paper analyzes the relationship between unemployment and residual wage dispersion for individuals with comparable attributes. In the conventional neoclassical point of view, wages are determined by the marginal product of the workers. Accordingly, increases in union minimum wages result in a decline of residual wage dispersion and higher unemployment. A competing view regards wage dispersion as the outcome of search frictions and the associated monopsony power of the firms. Accordingly, an increase in search frictions causes both higher unemployment and higher wage dispersion. The empirical analysis attempts to discriminate between the two hypotheses for West Germany analyzing the relationship between wage dispersion and both the level of unemployment as well as the transition rates between different labor market states. The findings are not completely consistent with either theory. However, as predicted by search theory, one robust result is that unemployment by cells is not negatively correlated with the within‐cell wage dispersion.

Das Argument, die niedrige Lohnspreizung in Deutschland sei der Hauptgrund für die hohe Arbeitslosenquote, gehört zu den Gemeinplätzen in der öffentlichen Auseinandersetzung über die Arbeitsmarktprobleme Deutschlands. Die Studie analysiert das Verhältnis von Arbeitslosigkeit und Lohnspreizung für Individuen mit vergleichbaren Eigenschaften. Vom konventionellen neoklassischen Standpunkt betrachtet werden die Löhne durch das Grenzprodukt der Arbeitnehmer bestimmt. Steigende Mindestlöhne resultieren, sofern sie eine Bindungswirkung entfalten, dann in einer Abnahme der Lohnspreizung und in höherer Arbeitslosigkeit. Eine konkurrierende Sichtweise betrachtet die Lohnspreizung als das Resultat von Suchfriktionen und der damit verbundenen Nachfragemacht der Unternehmen. Ein Anstieg der Suchfriktionen führt aus dieser Sicht sowohl zu höherer Arbeitslosigkeit als auch zu höherer Lohnspreizung. Aus diesen Theorieansätzen leiten die Autoren empirisch testbare einander zuwider laufende Hypothesen ab, die das Verhältnis von Lohnspreizung, Niveau der Arbeitslosigkeit und den Übergangsraten zwischen unterschiedlichen Arbeitsmarktzuständen betreffen. Die Ergebnisse ihrer empirischen Analysen sind mit keiner der beiden Theorien in vollem Umfang konsistent. Ein robustes und der Suchtheorie konsistentes Ergebnis ist indessen, dass Arbeitslosigkeit und Lohnspreizung für vergleichbare Individuen nicht negativ korreliert ist. (IAB)

In this paper, we study the effect of skill-biased technological change on unemployment when benefits are linked to the evolution of average income and when this is not the case. In the former 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 respective productivity increases, unemployment rises. More generally, we show that skill-biased technological change leads to increasing unemployment of the unskilled when benefits are endogenous. The model provides a theoretical explanation for diverging developments in wage inequality and unemployment under different social benefits regimes: Analyzing the social legislation in 14 countries, we find that benefits are linked to the evolution of average income in Continental Europe but not in the U.S. and the UK. Given this institutional difference, our model predicts that skill-biased technological change leads to rising unemployment in Continental Europe and rising wage inequality in the U.S. and the UK.