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Compensating wage differentials in stable job matching equilibrium

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  • Han, Seungjin
  • Yamaguchi, Shintaro

Abstract

This paper studies implicit pricing of non-wage job characteristics in the labor market using a two-sided matching model. It departs from the previous literature by allowing worker heterogeneity in productivity, which gives rise to a double transaction problem in a hedonic model. Deriving sufficient conditions under which assortative matching is the unique stable job-worker matching, we show that observed wage differentials between jobs reflect not only compensating wage differentials, but also worker productivity gaps between the jobs. We find that the job-worker matching pattern determines the extent to which compensating wage differentials are confounded with the worker productivity gap effect.

Suggested Citation

  • Han, Seungjin & Yamaguchi, Shintaro, 2015. "Compensating wage differentials in stable job matching equilibrium," Journal of Economic Behavior & Organization, Elsevier, vol. 114(C), pages 36-45.
    • Handle: RePEc:eee:jeborg:v:114:y:2015:i:c:p:36-45
    DOI: 10.1016/j.jebo.2015.03.011
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    Cited by:

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    2. Sergey K. Aityan & Alexey K. Ivanov-Schitz & Eugenia Logunova, 2017. "Measuring the Nonmonetary Component of General Value for Goods and Services," International Journal of Economics and Financial Issues, Econjournals, vol. 7(3), pages 69-81.
    3. Paul Sullivan, & Ted To, 2013. "Job Dispersion and Compensating Wage Differentials," Working Papers 469, U.S. Bureau of Labor Statistics.
    4. Peng, Zixuan & Shan, Wenxuan & Guan, Feng & Yu, Bin, 2016. "Stable vessel-cargo matching in dry bulk shipping market with price game mechanism," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 95(C), pages 76-94.

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    More about this item

    Keywords

    Hedonic model; Heterogeneity; Two-sided matching; Matchingpattern; Wage differential; Equalizing difference; Worker productivity;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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