Skilled-Unskilled Wage Differentials, Unemployment and Hours of Work: The Case of America and Europe
Muysken, Joan and Nekkers, Geralt (2000). Skilled-Unskilled Wage Differentials, Unemployment and Hours of Work: The Case of America and Europe. UNU-MERIT Research Memoranda. UNU-MERIT.
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Sub-type Working paper Author Muysken, Joan
Nekkers, GeraltTitle Skilled-Unskilled Wage Differentials, Unemployment and Hours of Work: The Case of America and Europe Series Title UNU-MERIT Research Memoranda Volume/Issue No. 2 Publication Date 2000 Publisher UNU-MERIT Language eng Abstract In our analysis we follow Davis (1998a) and consider the consequences from trade between a flexible-wage America and a rigid-minimum-wage Europe. The minimum wage implies a certain level of unemployment in Europe, whereas factor price equalisation guarantees the same wage in America, albeit at full employment levels. We then use a process of endogenous human capital accumulation, together with a lower schooling productivity for the American unskilled workers to explain the larger skilled-unskilled wage differential in America. Moreover, we show that unskilled workers in America will work more hours than their European counterparts. Copyright Year 2000 Copyright type All rights reserved -
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