Arbeitspapier
Labour market skills, endogenous productivity and business cycles
This paper analyses how labour market heterogeneity affects unemployment, productivity and business cycle dynamics that are relevant for monetary policy. The model matches remarkably well the short and long run dynamics of skilled and unskilled workers. Skill mismatch and skill-specific labour market institutions have three main effects on business cycles and growth dynamics. First, as the composition of labour market skills leads to supply segmentation, the relative scarcity of skilled workers increases the natural rate of unemployment and reduces total factor productivity with long- run effects on the growth rate of output. Second, skill heterogeneity in the labour market generates asymmetric outcomes and amplifies measures of employment, wages and consumption inequality. Finally, the model provides important insights for the Phillips and Beveridge curves. Skill-specific labour market heterogeneity leads to a flattening of the Phillips curve as wages and unemployment are affected differently across skill types. Also, the model generates sideward shifts of the Beveridge curve following business cycle shocks that are related to the degree of skill heterogeneity.
- ISBN
-
978-92-899-4984-2
- Language
-
Englisch
- Bibliographic citation
-
Series: ECB Working Paper ; No. 2651
- Classification
-
Wirtschaft
Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
One, Two, and Multisector Growth Models
Unemployment: Models, Duration, Incidence, and Job Search
- Subject
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Monetary policy
labour market
skill heterogeneity
endogenous growth
unemployment fluctuations
Phillips curve
Beveridge curve
consumption inequality
- Event
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Geistige Schöpfung
- (who)
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Abbritti, Mirko
Consolo, Agostino
- Event
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Veröffentlichung
- (who)
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European Central Bank (ECB)
- (where)
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Frankfurt a. M.
- (when)
-
2022
- DOI
-
doi:10.2866/388837
- Handle
- Last update
-
10.03.2025, 11:44 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Abbritti, Mirko
- Consolo, Agostino
- European Central Bank (ECB)
Time of origin
- 2022
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