Creator: Chari, V. V. and Hopenhayn, Hugo Andres. Series: Working paper (Federal Reserve Bank of Minneapolis. Research Dept.) Number: 326 Abstract:
'Structural unemployment' is said to occur in regions or 'sectors' of the economy as a consequence of technological changes. In this paper we present a model which provides an environment which gives rise to unemployment which could be labelled structural unemployment. There is exogenous technological change and vintage specific human capital. Unemployment arises as workers specialized in a particular technology within a vintage decide to search for a job within their vintage, so that their previously acquired special skills are used, instead of getting employed as unskilled workers in the newest vintage. As the rate of technological change increases, the incentives to reassign specialized workers to their same vintage, inccuring therefore in search costs, becomes less attractive, and in consequence the fraction of specialized workers doing search activities decreases. This provides some rationale for the negative correlation between rates of growth and unemployment observed in the data.
Keyword: Vintage human capital, Structural unemployment, Skills, Human capital, Growth, Labor market, Unemployment, and Technology Subject (JEL): J24 - Demand and supply of labor - Human capital ; Skills ; Occupational choice ; Labor productivity and E24 - Macroeconomics : Consumption, saving, production, employment, and investment - Employment ; Unemployment ; Wages ; Intergenerational income distribution ; Aggregate human capital