ABSTRACT
This chapter focuses on the way in which the existence of asymmetric substitution possibilities influences the scope for wage cuts as an instrument to influence the distribution of unemployment over different skill groups. It begins with a description of the match between skills and jobs in the Netherlands. The chapter describes the skill-substitution framework, and discusses the production function framework and the way in which the skill-substitution framework is integrated with the rest. It provides a description of the simulation experiments which have conducted with the model. High-skilled people may in general be expected to perform better in low-level jobs than low-skilled people in high-level jobs. High-skilled people can be hired for more levels of jobs than low-skilled people. This provides an asymmetry in employment opportunities for high-skilled and low-skilled people, which, given a certain lack of compensating asymmetries in wage formation, might lead to a bias in employment opportunities in favour of high-skilled people rather than low-skilled people.
