Employment effects of skill biased technological change when benefits are linked to per-capita income

Weiss, Matthias

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URL:	https://ub-madoc.bib.uni-mannheim.de/284
URN:	urn:nbn:de:bsz:180-madoc-2848
Document Type:	Working paper
Year of publication:	2004
The title of a journal, publication series:	MEA Discussion Papers
Volume:	043
Place of publication:	Mannheim
Publication language:	English
Institution:	School of Law and Economics > Sonstige - Fakultät für Rechtswissenschaft und Volkswirtschaftslehre
MADOC publication series:	Veröffentlichungen des MEA (Mannheim Research Institute For the Economics of Aging) > MEA Discussion Papers
Subject:	330 Economics
Classification:	JEL: O 30 J 50 J 31 E 24 ,
Subject headings (SWD):	Beschäftigungswirkung , Technischer Fortschritt
Abstract:	This paper studies the employment effects of technological change when benefits are endogenous. If the (i) level of welfare aid depends on the general income level in the economy and (ii) wages for unskilled workers cannot fall below the level of welfare aid, there is a link between the wage for unskilled labor and the productivity of skilled labor. An increase in the latter will lead to an increase in average income and hence the level of welfare aid. This in turn leads unions to ask for higher wages for unskilled workers. Technological change is shown to have employment effects (only) if it is skill-biased and if this link exists.
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