Qualification-Mismatch and Long-Term Unemployment in a Growth-Matching Model

(c)

Figure 5: Technical Progress and Long-Term Unemployment in an Innovation Econ-
omy.

since the stock of difficult placeable jobless workers increases whereby this stock is
characterized by the long-term unemployed itself. Since the introduction of tech-
nological progress generates vacancies endowed with the newest technology, firms
demand only highly qualified workers. Because the unemployment pool is hetero-
geneous and consists of short-term and long-term unemployed, firms prefer to hire
the short-term jobless workers. They possess most of their human capital and have
better productive abilities than the long-term unemployed. Therefore, out of both
unemployment groups, short-term unemployed are the potential candidates for the
matching process since they do not have the stigma of human capital deprecia-
tion and of motivation losses. Due to this characteristics, job-matches are formed
between firms and short-term unemployed implying that steady-state long-term un-
employment increases additionally (from φ₁ to <>,. see Figure 5c).

Imitation Economy

On the other hand regarding an economy with a low equilibrium level of capital
intensity, the effect of an increase in technological progress on the labor market is
ambiguous. In these economies the introduction of technical progress signifies that
the production technologies being implemented are already known in economies with
high capital intensities and, due to the import of goods and technologies from inno-
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