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


Has the relative unemployment propensity for the low-skilled increased during the 1990’s? We address this question empirically, based on two notions of ‘low skills’; i) low education, and ii) low ability, conditioned on education and work experience. Ability is identified by previous earnings. Evaluated by the education-based measure, we find that unemployment propensity has not developed unfavourably for the low-skilled. Evaluated by the ability-based measure, it has. We uncover a steady deterioration of employment prospects for persons with low ability relative to others with similar formal qualifications. The adverse employment effects of being low-skilled are stronger the higher is formal education.

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Correspondence to Knut Røed.

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All correspondence to Knut Røed. The paper is part of the project ‘Sorting, exposed groups and labour market programs’ financed by the Research Council of Norway. We wish to thank Rolf Aaberge, Paul Gertler, Harald Goldstein, Karl Ove Moene, Jon Strand, Steinar Strøm, Asbjrn Rødseth and an anonymous referee for helpful comments. Responsible editor: John F. Ermisch.

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Røed, K., Nordberg, M. Have the relative employment prospects for the low-skilled deteriorated after all?. J Popul Econ 17, 67–82 (2004).

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JEL classification

  • C31
  • J64

Key words

  • Skill-biased technical change
  • relative unemployment rates