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Labor supply dynamics, unemployment and experience in the labor market
Published online by Cambridge University Press: 17 August 2016
Summary
In the last decades, OECD labor markets faced important labor supply changes with the arrival of women and the cohorts of the baby-boom. Using a survey where workers declare their true employment experience, this paper argues that these supply trends imply more inexperienced workers. It then investigates the consequences of this fact on the skill composition of the labor force, between-groups wage inequality and the level of unemployment. The main result is that a labor market with wage rigidities may not recover from such a temporary labor supply shock: with a younger and less experienced labor force, there is higher unemployment among low-experience workers, they do not accumulate enough on-the-job human capital, this reduces in the long-run the supply of skilled (experienced) workers and the demand for unskilled workers. This intertemporal multiplication of supply shocks generates multiple equilibria, and the rigid economy is stuck to the bad equilibrium even after the shock. In a competitive labor market, in contrast, wage inequality and notably, the wage return to experience becomes higher but there is no persistence of the supply shock.
Résumé
Les marchés du travail des pays de l'OCDE ont absorbé au cours des dernières décennies à la fois l'arrivée des jeunes du baby-boom et des travailleurs féminins. A partir de données individuelles où les travailleurs déclarent leur expérience réelle de l'emploi, cet article défend l'idée que ces tendances de l'offre de travail s'analysent comme une augmentation de l'inexperience. On étudie ensuite les conséquences de cette tendance sur la composition des qualifications, les inégalités de salaire entre groupes et le niveau de chômage. Le principal résultat est que dans un marché avec rigidités salariales, un choc temporaire d'offre de travail peut avoir des effets permanents : une population active plus jeune et moins expérimentée implique plus de chômage chez les travailleurs sans expérience ce qui réduit leur accumulation de capital humain on-the-job, ce qui réduit dans le long-terme l'offre de qualification liée à l'expérience et la demande de travailleurs non-qualifiés. Cette multiplication intertemporelle est chocs d'offre de travail produit des équilibres multiples, et l'économie « rigide » reste bloquée dans le mauvais équilibre même après le choc. Dans un marché du travail compétitif, au contraire, l'inégalité salariale et notamment les rendements de l'expérience augementent mais il n'y a pas de persistence des chocs d'offre de travail.
Keywords
- Type
- Research Article
- Information
- Recherches Économiques de Louvain/ Louvain Economic Review , Volume 70 , Issue 4 , 2004 , pp. 461 - 482
- Copyright
- Copyright © Université catholique de Louvain, Institut de recherches économiques et sociales 2004
Footnotes
*
Based on IlES Seminar Paper Series 98-651, IZA dp 463 with a slight change in the title. It is also based on two chapters of my PhD dissertation at the London School of Economics. The empirical part on French data was done at INSEE-CREST, the hospitality of which is gratefully acknowledged. I thank Christophe Soil for the simulation part.
**
Other afiliations : CIRPEE and ECARES, UniversitÈ Libre de Bruxelles. Address: UniversitÈ du QuÈbec‡ MontrÈal, DÈpartement des sciences Èconomiques, Case postale 8888, Succursale Centre-Ville, MontrÈal (QuÈbec), CANADA H3C 3P8
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