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

authored by
Patrick A. Puhani
Abstract

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.

External Organisation(s)
University of St. Gallen (HSG)
Type
Article
Journal
KYKLOS
Volume
56
Pages
541-562
No. of pages
22
ISSN
0023-5962
Publication date
2003
Publication status
Published
Peer reviewed
Yes
ASJC Scopus subject areas
Arts and Humanities (miscellaneous), Economics and Econometrics
Sustainable Development Goals
SDG 8 - Decent Work and Economic Growth
Electronic version(s)
https://doi.org/10.1046/j.0023-5962.2003.00237.x (Access: Closed)