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Working Papers (2001), ESSEC Business School

Technological Change, Acquisition of Skills and Wages in a Search Economy

BESANCENOT D., VRANCEANU Radu

This paper analyses the impact of a technological shock on labour market equilibrium in a decentralized economy where firms search for the best workers. Workers choose in an optimal way their training effort and resulting skill level. We put forward several types of Nash equilibria, in keeping with the proportion of firms that have implemented the new technology. One of them implies a non-degenerated distribution of wages. A comparison in the aggregate profits across various equlibria supports the Schumpeterian view on the dynamics of technical progress.

BESANCENOT, D. and VRANCEANU, R. (2001). Technological Change, Acquisition of Skills and Wages in a Search Economy. ESSEC Business School.