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Wage distributions and wage dynamics in Europe and the US : lessons from a simple job search model

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Author Info
Grégory Jolivet
Fabien Postel-Vinay
Jean-Marc Robin ()

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Abstract

Job 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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Publisher Info
Paper provided by Laboratoire d'Economie Appliquee, INRA in its series Research Unit Working Papers with number 0302.

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Length: 35 pages
Date of creation: Mar 2003
Date of revision:
Handle: RePEc:lea:leawpi:0302

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Related research
Keywords: Labor market frictions; wage distribution; wage dynamics; job mobility;

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Find related papers by JEL classification:
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

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References listed on IDEAS
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.:
  1. Fabien Postel-Vinay & Jean-Marc Robin, 2004. "To Match or Not to Match? Optimal Wage Policy With Endogenous Worker Search Intensity," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 7(2), pages 297-330, April. [Downloadable!] (restricted)
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  2. Fabien Postel-Vinay & Jean-Marc Robin, 2002. "Equilibrium Wage Dispersion with Worker and Employer Heterogeneity," Econometrica, Econometric Society, vol. 70(6), pages 2295-2350, November. [Downloadable!] (restricted)
    Other versions:
  3. Ridder, Geert & van den Berg, Gerard J., 2002. "A cross-country comparison of labor market frictions," Working Paper Series 2002:22, IFAU - Institute for Labour Market Policy Evaluation. [Downloadable!]
  4. Fabien Postel-Vinay & Jean-Marc Robin, 2002. "The Distribution of Earnings in an Equilibrium Search Model with State-Dependent Offers and Counteroffers," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(4), pages 989-1016, November. [Downloadable!] (restricted)
  5. Margaret Stevens, 2004. "Wage-Tenure Contracts in a Frictional Labour Market: Firms' Strategies for Recruitment and Retention," Review of Economic Studies, Blackwell Publishing, vol. 71(2), pages 535-551, 04. [Downloadable!] (restricted)
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  6. B.J. Christensen & D.T. Mortensen & G. Neumann & A. Werwatz, . "On the Job Search and the Wage Distribution," Sonderforschungsbereich 373 2000-108, Humboldt Universitaet Berlin.
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  7. Burdett, Kenneth & Mortensen, Dale T, 1998. "Wage Differentials, Employer Size, and Unemployment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(2), pages 257-73, May.
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Cited by:
(explanations, 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.)

  1. Francesco Drago, 2006. "Career Consequences of Hyperbolic Time Preferences," IZA Discussion Papers 2113, Institute for the Study of Labor (IZA). [Downloadable!]
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