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EU KLEMS Working Paper Series

No. 20

Broersma, Lourens (2008), Differences in Unemployment by Educational Attainment in the US and Europe: What Role for Skill-Bias Technological Change and Institutions?, (January 2008)

Abstract

This study is about differences in unemployment rate by educational attainment between the US and Europe over the past three decades. Apart from usual explanatory variables, like wage differentials between educational groups in the two regions, specific attention will be given to complementarities between capital and skilled labour. Increasing capital stock raises skilled wages more than unskilled wages, i.e. raises demand for skilled workers and hence leads to a relative fall in unemployment among high skilled. We find that this skilled biased technology effect is larger in the US than in Europe. European institutions favour wage equality but these also imply less incentives to migrate to higher education classes. This has a depressing effect on skilled labour supply. This means there is less mobility in the European labour market compared to the US, not just from a spatial but also from an educational perspective.

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This project is funded by the European Commission, Research Directorate General as part of the 6th Framework Programme, Priority 8, "Policy Support and Anticipating Scientific and Technological Needs".



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Last changed on: February 14 2008