On the Dynamics of Unemployment and Wage Distributions
AbstractPostel-Vinay and Robinâs (2002) sequential auction model is extended to allow for aggregate productivity shocks. Workers exhibit permanent differences in ability while firms are identical. Negative aggregate productivity shocks induce job destruction by driving the surplus of matches with low ability workers to negative values. Endogenous job destruction coupled with worker heterogeneity thus provides a mechanism for amplifying productivity shocks that offers an original solution to the unemployment volatility puzzle (Shimer (2005)). Moreover, positive or negative shocks may lead employers and employees to renegotiate low wages up and high wages down when agentsâ individual surpluses become negative. The model delivers rich business cycle dynamics of wage distributions and explains why both low wages and high wages are more procyclical than wages in the middle of the distribution.
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Bibliographic InfoArticle provided by Econometric Society in its journal Econometrica.
Volume (Year): 79 (2011)
Issue (Month): 5 (09)
Other versions of this item:
- Jean-Marc Robin, 2011. "On the Dynamics of unemployment and wage Distributions," Sciences Po publications info:hdl:2441/eu4vqp9ompq, Sciences Po.
- Jean-Marc Robin, 2010. "On the dynamics of unemployment and wage distributions," CeMMAP working papers CWP04/10, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Helene Turon & Fabien Postel-Vinay, 2005.
"The Public Pay Gap in Britain: Small Differences that (Don't?) Matter,"
2005 Meeting Papers
92, Society for Economic Dynamics.
- Fabien Postel-Vinay & Hélène Turon, 2007. "The Public Pay Gap in Britain: Small Differences That (Don't?) Matter," Economic Journal, Royal Economic Society, vol. 117(523), pages 1460-1503, October.
- Fabien Postel-Vinay & Hélène Turon, 2005. "The Public Pay Gap in Britain: Small Differences That (Don't?) Matter," PSE Working Papers halshs-00590765, HAL.
- Fabien Postel-Vinay & Hélène Turon, 2005. "The Public Pay Gap in Britain: Small Differences That (Don't?) Matter," The Centre for Market and Public Organisation 05/121, Department of Economics, University of Bristol, UK.
- Postel-Vinay, Fabien & Turon, Hélène, 2005. "The Public Pay Gap in Britain: Small Differences That (Don't?) Matter," IZA Discussion Papers 1637, Institute for the Study of Labor (IZA).
- Postel-Vinay, Fabien & Turon, Hélène, 2005. "The Public Pay Gap in Britain: Small Differences That (Don’t?) Matter," CEPR Discussion Papers 5296, C.E.P.R. Discussion Papers.
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