November 1, 1998

Do more high skilled workers occupy simple jobs during bad times?

This paper shows what the consequences for both low and high skilled employment rates are when unemployed high skilled workers search for both simple and complex jobs and continue searching for complex jobs when they happen to meet a simple vacancy first.

Moreover, we use a matched firmworker data-set to investigate whether more high skilled workers occupy simple jobs during bad times - as crowding out theories predict. The results of the analysis suggest that only weak evidence exists for crowding out of intermediate-skilled workers by high- skilled workers in the beginning of the nineties but no evidence for the crowding out of low-skilled workers. Some evidence is given for the hypothesis that the high unemployment rates among low-skilled workers are caused by the fact that firing costs for simple jobs (where relatively many low-skilled workers are employed) are lower than for complex jobs.