The relationship between skill and unemployment rate is an inverted U-shape and youth unemployment rate is 2.5 higher than adult unemployment rate in Brazil. This paper argues that these facts are due to asymmetric information in the labor market. Semi-skilled workers have higher asymmetric information because they are a very heterogeneous group and their educational level offers little information to the employer about the worker's productivity ability. The asymmetric information is higher for young workers because some information about the productivity is revealed as the worker accumulates experience in the labor market. Assuming that asymmetric information leads to homogeneous wages, the evidences are consistent with our hypothesis. The employers have less information about the young and semi-skilled productivities and asymmetric information is positively correlated with unemployment rate.
