ARE THE UNEMPLOYED UNEMPLOYABLE

This paper develops a matching model of the labor market under wage ri gidity when hiring decisions are irreversible. There are two types of workers, the skilled and the unskilled. The model is used to analyze w hether technological advances may have increased unemployment. It is s hown that it is likely to be so if they are associated with an increas e in the productivity and/or the supply of skilled workers relative to unskilled workers. These effects are stronger when hiring decisions a re more irreversible.