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Matching, Specialties and Wage Inequality

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  • Konstantinos Eleftheriou

    ()
    (Department of Economics, University of Essex, UK)

Abstract

Empirical evidence show that there is a negative relation between policies that accelerate the matching process in labor market and "within-group" wage inequality. We apply the standard "search and matching" framework to construct a labor market model with ex-ante heterogeneous workers, so as to examine and interpret this phenomenon. We show that a composition effect working through the effective rate of employment opportunities (decision pattern through which individuals accept or reject jobs in which they are less specialized) is responsible for the increase in within group inequality as matching process is accelerated.

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File URL: http://www.accessecon.com/pubs/EB/2008/Volume10/EB-08N30001A.pdf
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Bibliographic Info

Article provided by AccessEcon in its journal Economics Bulletin.

Volume (Year): 10 (2008)
Issue (Month): 11 ()
Pages: 1-12

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Handle: RePEc:ebl:ecbull:eb-08n30001

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Keywords: wage inequality;

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  1. Acemoglu, D., 1996. "Changes in Unemployment and Wage Inequality: An Alternative Theory and Some Evidence," Working papers 96-15, Massachusetts Institute of Technology (MIT), Department of Economics.
  2. Machin, Stephen, 1996. "Wage Inequality in the UK," Oxford Review of Economic Policy, Oxford University Press, vol. 12(1), pages 47-64, Spring.
  3. repec:cup:cbooks:9780521424080 is not listed on IDEAS
  4. Christopher A. Pissarides, 2000. "Equilibrium Unemployment Theory, 2nd Edition," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262161877, December.
  5. Melissa Osborne & Herbert Gintis & Samuel Bowles, 2001. "The Determinants of Earnings: A Behavioral Approach," Journal of Economic Literature, American Economic Association, vol. 39(4), pages 1137-1176, December.
  6. Heckman, James J & Sedlacek, Guilherme, 1985. "Heterogeneity, Aggregation, and Market Wage Functions: An Empirical Model of Self-selection in the Labor Market," Journal of Political Economy, University of Chicago Press, vol. 93(6), pages 1077-1125, December.
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Cited by:
  1. Eric Smith, 2009. "Sector-specific human capital and the distribution of earnings," Working Paper 2009-21, Federal Reserve Bank of Atlanta.

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