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This paper has developed a three-sector general equilibrium framework that explains unemployment of both skilled and … unskilled labour. Unemployment of unskilled labour is of the Harris-Todaro (1970) type while unemployment of skilled labour is …-unskilled wage inequality and the extent of unemployment of both types of labour crucially hinge on the properties implied by the …
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unemployment to employment in routine occupations, (ii) that from labor force non-participation to routine employment, and (iii …
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We study the effect of financial shocks in labor market dynamics. We build a model with two types of labor, two types of capital and both search and financial frictions. We find that financial shocks, modeled as exogenous disturbances to the borrowing constraint of firms, can generate realistic...
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