Stick, Carrot and Skill Acquisition

Birthe Larsen, Trine Filges

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Abstrakt

We evaluate the impact of specially designed youth unemployment programmes (YUPs), intended to provide young unemployed unskilled workers with skills. If unemployment among skilled workers is lower than among unskilled workers, YUPs imply that unemployment falls. However, YUPs potentially crowd out ordinary training. We set up an equilibrium matching model with endogenous skill choice and examine the impact of an increase in programme participation. We derive a condition for crowding out of ordinary training, as well as a condition for an increase in the skilled labour force and thereby reduced unemployment. The impact of YUPs on welfare and wage dispersion is also considered.
OriginalsprogEngelsk
TidsskriftScandinavian Journal of Economics
Vol/bind107
Udgave nummer3
Sider (fra-til)495-519
Antal sider24
ISSN0347-0520
DOI
StatusUdgivet - 2005

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