What explains high unemployment among low-skilled workers? Evidence from 21 OECD countries

摘要

In OECD countries, unemployment disproportionately affects low-skilled workers. This article examines four explanations: wage-setting institutions, employment regulation, globalization and monetary policy. The analysis is based on pooled regressions for 21 affluent countries over the period 1991-2006. We find no support for the argument that low-skilled workers' employment prospects are hindered by legal minimum wages or strict employment protection, nor that wage inequality improves low-skilled employment. By contrast, investment in active labour market policies pays off and low real interest rates are associated with significantly less low-skilled unemployment. Hence, low-skilled workers' job prospects seem enhanced by a combination of active labour market programmes with monetary policy that fully exploits the economy's growth potential.