Have the relative employment prospects for the low-skilled deteriorated after all?

With the aid of Norwegian register data, the paper investigates whether or not the relative unemployment propensity for the low-skilled has increased during the 1990’s. Two alternative notions of ‘low skills’ are employed; i) low education, and ii) low previous earnings, conditioned on education and work experience. According to the standard education-based measure, we find that unemployment propensity has not at all developed unfavourably for the low-skilled. According to the earnings based measure, it has. We uncover a steady and significant deterioration of employment prospects for persons with particularly low previous earnings relative to others with similar formal qualifications.