Wage distributions and wage dynamics in Europe and the US : lessons from a simple job search model
AbstractJob search models of the labor market establish a very tight correspondance between the determinants of labor turnover and individual wage dynamics on one hand, and the determinants of wage dispersion on the other. This paper offers a systematic examination of wether this correspondance is present in the data by estimating a rudimentary partial equilibrium job search model on the ECHP database, from which we extract a 1996-1999 panel of individual worker data from 12 different European countries. We find that our basic job search model fits the data surprisingly well. This also allows us to point a number of interesting emprirical regularities about wage distributions. Finally, our results suggest that cross-sectional data on individual wages contain the basic information needed to obtain reliable estimates of the "search frictions" parameters of a canonical job search model.
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Bibliographic InfoPaper provided by Laboratoire d'Economie Appliquee, INRA in its series Research Unit Working Papers with number 0302.
Length: 35 pages
Date of creation: Mar 2003
Date of revision:
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Labor market frictions; wage distribution; wage dynamics; job mobility;
Other versions of this item:
- Jean-Marc Robin & Gregory Jolivet & Fabien Postel-Vinay, 2004. "Wage Distributions and Wage Dynamics in Europe and the US: Lessons from a Simple Job Search Model," 2004 Meeting Papers 23, Society for Economic Dynamics.
- J64 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment: Models, Duration, Incidence, and Job Search
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
This paper has been announced in the following NEP Reports:
- NEP-ALL-2003-05-08 (All new papers)
- NEP-EEC-2003-05-08 (European Economics)
- NEP-LAB-2003-05-08 (Labour Economics)
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- Drago, Francesco, 2006. "Career Consequences of Hyperbolic Time Preferences," IZA Discussion Papers 2113, Institute for the Study of Labor (IZA).
- Etienne Wasmer, 2006. "Interpreting Europe and US labor markets differences : the specificity of human capital investments," Sciences Po publications info:hdl:2441/8904, Sciences Po.
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