A theory of education, unemployment and job mobility

A theory of education, unemployment and job mobility,Bruno DECREUSE,Pierre GRANIER

A theory of education, unemployment and job mobility  
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This paper offers a theoretical perspective on the interactions between edu- cation and different aspects of mobility on the labour market. We propose a search equilibrium model in which the length of schooling defines the number of occupa- tions a worker can apply for — what we term job mobility. Returns to education are twofold: there are status-mobility returns, since education raises a person's chance of leaving unemployment; but there are also wage-mobility returns, as education raises the speed at which one climbs the wage ladder. Unemployment incidence and du- ration as well as wage dispersion provide incentives to schooling; in turn, labour demand and wage dispersion respond to education investments. Unlike status- mobility returns, wage-mobility returns to schooling are not matched by a social gain, and workers over-educate. A combination of minimum wage and schooling fee can restore social efficiency.
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