Job Matching and the Wage Distribution

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Job Matching and the Wage Distribution

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Giuseppe Moscarini

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Giuseppe Moscarini

Abstract

This paper brings together the microeconomic-labor and the macroeconomic-equilibrium views of matching in labor markets. We nest a job matching model à la Jovanovic (1984) into a Mortensen and Pissarides (1994)-type equilibrium search environment. The resulting framework preserves the implications of job matching theory for worker turnover and wage dynamics, and it also allows for aggregation and general equilibrium analysis. We obtain two new equilibrium implications of job matching and search frictions for wage inequality. First, learning about match quality and worker turnover map Gaussian output noise into an ergodic wage distribution of empirically accurate shape: unimodal, skewed, with a Paretian right tail. Second, high idiosyncratic productivity risk hinders learning and sorting, and reduces wage inequality. The equilibrium solutions for the wage distribution and for the aggregate worker flows-quits to unemployment and to other jobs, displacements, hires-provide the likelihood function of the model in closed form. Copyright The Econometric Society 2005.

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Article provided by Econometric Society in its journal Econometrica.

Volume (Year): 73 (2005)
Issue (Month): 2 (03)
Pages: 481-516
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Handle: RePEc:ecm:emetrp:v:73:y:2005:i:2:p:481-516

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Michael U. Krause & Thomas A. Lubik, 2007. "On-the-job search and the cyclical dynamics of the labor market," Working Paper Series 779, European Central Bank. [Downloadable!]
Other versions:
- Krause, Michael & Lubik, Thomas A., 2007. "On-the-job search and the cyclical dynamics of the labor market," Discussion Paper Series 1: Economic Studies 2007,15, Deutsche Bundesbank, Research Centre. [Downloadable!]
- Thomas Lubik & Michael Krause, 2004. "On-the-Job Search and the Cyclical Dynamics of the Labor Market," Economics Working Paper Archive 513, The Johns Hopkins University,Department of Economics. [Downloadable!]
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Pieter A. Gautier & Coen N. Teulings & Aico van Vuuren, 2005. "On-The-Job Search and Sorting," IZA Discussion Papers 1687, Institute for the Study of Labor (IZA). [Downloadable!]
Other versions:
- Gautier, Pieter A & Teulings, Coen N & van Vuuren, Aico, 2006. "On-the-Job Search and Sorting," CEPR Discussion Papers 5575, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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Shouyong Shi, 2008. "Directed Search for Equilibrium Wage-Tenure Contracts," Working Papers tecipa-343, University of Toronto, Department of Economics. [Downloadable!]
Other versions:
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Other versions:
- Dale T. Mortensen, 2005. "More on Unemployment and Vacancy Fluctuations," 2005 Meeting Papers 326, Society for Economic Dynamics.
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Juan J. Dolado & Marcel Jansen & Juan F. Jimeno, 2008. "On the job search in a matching model with heterogeneous jobs and workers," Banco de EspaÃ±a Working Papers 0813, Banco de España. [Downloadable!]
Other versions:
- Dolado, Juan J. & Jansen, Marcel & Jimeno, Juan Francisco, 2003. "On-the-Job Search in a Matching Model with Heterogeneous Jobs and Workers," CEPR Discussion Papers 4094, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
- Dolado, Juan J. & Jansen, Marcel & Jimeno, Juan F., 2003. "On-the-Job Search in a Matching Model with Heterogenous Jobs and Workers," IZA Discussion Papers 886, Institute for the Study of Labor (IZA). [Downloadable!]
- Juan J. Dolado & Marcel Jansen & Juan F. Jimeno, . "On-the-Job Search in a Matching Model with Heterogenous Jobs and Workers," Working Papers 2003-21, FEDEA. [Downloadable!]
- JuanJ. Dolado & Marcel Jansen & JuanF. Jimeno, 2009. "On-the-Job Search in a Matching Model with Heterogeneous Jobs and Workers," Economic Journal, Royal Economic Society, vol. 119(534), pages 200-228, 01. [Downloadable!] (restricted)
Alós-Ferrer, Carlos & Prat, Julien, 2008. "Job Market Signaling and Employer Learning," IZA Discussion Papers 3285, Institute for the Study of Labor (IZA). [Downloadable!]
Nicolas L. Jacquet, 2007. "Inefficient Worker Turnover," Working Papers 17-2007, Singapore Management University, School of Economics. [Downloadable!]
Armin Falk & David Huffman & Uwe Sunde, 2006. "Do I Have What It Takes? Equilibrium Search with Type Uncertainty and Non-Participation," IZA Discussion Papers 2531, Institute for the Study of Labor (IZA). [Downloadable!]
Boockmann, Bernhard & Steffes, Susanne, 2008. "Workers, Firms, or Institutions: What Determines Job Duration for Male Employees in Germany?," ZEW Discussion Papers 08-116, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
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Decreuse, Bruno & Zylberberg, André, 2006. "Job search with ubiquity and the wage distribution," MPRA Paper 3630, University Library of Munich, Germany, revised May 2007. [Downloadable!]
Other versions:
- Bruno Decreuse & André Zylberberg, 2007. "Job search with ubiquity and the wage distribution," Working Papers halshs-00255780_v1, HAL. [Downloadable!]
Elhanan Helpman & Oleg Itskhoki & Stephen Redding, 2008. "Inequality and Unemployment in a Global Economy," NBER Working Papers 14478, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
Other versions:
- Helpman, Elhanan & Itskhoki, Oleg & Redding, Stephen J, 2009. "Inequality and Unemployment in a Global Economy," CEPR Discussion Papers 7353, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
- Elhanan Helpman & Oleg Itskhoki & Stephen Redding, 2009. "Inequality and Unemployment in a Global Economy," CEP Discussion Papers dp0940, Centre for Economic Performance, LSE. [Downloadable!]

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