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Selection Wages: An Example

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  • Schlicht, Ekkehart

    ()
    (University of Munich)

Abstract

Offering higher wages may enable firms to attract more applicants and screen them more carefully. If firms compete in this way in the labor market, "selection wages" emerge. This note illustrates this wage-setting mechanism. Selection wages may engender unconventional results, such as a pre-tax wage compression induced by the introduction of a progressive wage tax.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2507.

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Length: 9 pages
Date of creation: Dec 2006
Date of revision:
Handle: RePEc:iza:izadps:dp2507

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Related research

Keywords: wage-tax; job-specific pay; wage formation; efficiency wage; incentive wage; mobility;

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  1. Schlicht, Ekkehart, . "Job Rents in a Stylized Labor Market," Chapters in Economics, University of Munich, Department of Economics.
  2. Phelps, Edmund S, 1995. "The Structuralist Theory of Employment," American Economic Review, American Economic Association, vol. 85(2), pages 226-31, May.
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