TY - JOUR

T1 - Relative demand shocks and relative wage rigidities during the rise and fall of Swiss unemployment

AU - Puhani, Patrick A.

N1 - ACKNOWLEDGEMENTS This research was supported by the Volkswagen Foundation and the Swiss Na-tional Science Foundation (SNF) under the National Research ProgrammeNFPNR 45 with proposal number 4045-059673. Many thanks also go to IZA, Bonn, for supporting this project. The work on this paper was done during myleave during the 2001/2 academic year in the Economics Department at MIT,whose hospitality and support are gratefully acknowledged. I am grateful toDaron Acemoglu, Yves Ammann, Joshua Angrist, David Autor, Peter Balastair,Thomas Bauer, Daniel M. Bernhofen, Hielke Buddelmeyer, Donald Cox,Jean-Marc Falter, Christopher Foote, Richard B. Freeman, Markus Frölich,Caroline M. Hoxby, Ira Gang, Michael Gerfin, Peter Gottschalk, Heinz Hauser,Wayne Gray, Lawrence F. Katz, Gebhard Kirchgässner, Winfried Koeniger,Michel Kolly, Astrid Kunze, Valérie Lässig, Michael Lechner, Thomas Liebig,Stephen Machin, Hans Mangold, Blaise Melly, Ulrich Müller, Gerard Pfann,Steve Pischke, Hedwig Prey, Jeff Smith, Alfred Schmutz, Heidi Steiger, Bern-hard A. Weber, Klaus F. Zimmermann, and seminar participants at Boston Col-lege, the Centre for European Economic Research (ZEW), Clark University,Harvard University, the Institute for the Study of Labor (IZA), MIT, and the10th International Conference on Panel Data in Berlin 2002, for helpful com-ments. All remaining errors are my own.

PY - 2003

Y1 - 2003

N2 - Little is known on the existence of negative relative demand shocks against low-skilled workers on a 'US-style' deregulated labour market with a 'German-style' vocational (apprenticeship) education system. Switzerland provides an appealing testing ground to investigate this question. Traditionally a 'zero unemployment' economy, Switzerland has seen an unprecedented rise in joblessness in the 1990s, although unemployment fell again to a rather low level after 1997. This paper tests whether Switzerland experienced a negative relative demand shock against the low skilled during this period and whether this shock resulted in growing wage dispersion between education groups (like in the US) or in growing unemployment (like in continental Europe). It turns out that only workers with an educational level below apprenticeship were affected by a negative relative demand shock, which speaks in favour of the German-style vocational education system. The Swiss wage structure, however, did not react to the relative demand shock against low-skilled workers without apprenticeship, which resulted in higher relative unemployment for this group.

AB - Little is known on the existence of negative relative demand shocks against low-skilled workers on a 'US-style' deregulated labour market with a 'German-style' vocational (apprenticeship) education system. Switzerland provides an appealing testing ground to investigate this question. Traditionally a 'zero unemployment' economy, Switzerland has seen an unprecedented rise in joblessness in the 1990s, although unemployment fell again to a rather low level after 1997. This paper tests whether Switzerland experienced a negative relative demand shock against the low skilled during this period and whether this shock resulted in growing wage dispersion between education groups (like in the US) or in growing unemployment (like in continental Europe). It turns out that only workers with an educational level below apprenticeship were affected by a negative relative demand shock, which speaks in favour of the German-style vocational education system. The Swiss wage structure, however, did not react to the relative demand shock against low-skilled workers without apprenticeship, which resulted in higher relative unemployment for this group.

UR - http://www.scopus.com/inward/record.url?scp=0344688232&partnerID=8YFLogxK

U2 - 10.1046/j.0023-5962.2003.00237.x

DO - 10.1046/j.0023-5962.2003.00237.x

M3 - Article

AN - SCOPUS:0344688232

VL - 56

SP - 541

EP - 562

JO - KYKLOS

JF - KYKLOS

SN - 0023-5962

IS - 4

ER -