This paper analyses how labour market heterogeneity affects unemployment, productivity and business cycle dynamics that … skilled workers increases the natural rate of unemployment and reduces total factor productivity with long- run effects on the … Beveridge curves. Skill-specific labour market heterogeneity leads to a attening of the Phillips curve as wages and unemployment …

with a SVAR model by inspecting how unemployment responds to the state of the economy. We show that deviations from Okun …