Efficient Wage Dispersion

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Efficient Wage Dispersion

Author Info

Acemoglu, D.
Shimer, R.

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Abstract

In market economies, identical workers receive very different wages, violating the Walrasian 'law of one price'. We argue that in the absence of a Walrasian auctioneer to coordinate trade, wage dispersion among identical workers is an equilibriu m phenomenon. Moreover, wage dispersion is necessary for an economy to function efficiently. In the absence of wage dispersion, workers have little incentive to gather information, effectively giving monopsony power to firms.

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Publisher Info
Paper provided by Massachusetts Institute of Technology (MIT), Department of Economics in its series Working papers with number 97-7.

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Length: 46 pages
Date of creation: 1997
Date of revision:
Handle: RePEc:mit:worpap:97-7

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Postal: MASSACHUSETTS INSTITUTE OF TECHNOLOGY (MIT), DEPARTMENT OF ECONOMICS, 50 MEMORIAL DRIVE CAMBRIDGE MASSACHUSETTS 02142 USA
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Related research
Keywords: EFFICIENCY ; WAGES ; TECHNOLOGY;

Other versions of this item:

Paper
- Acemoglu, D. & Shimer, R., 1997. "Efficient Wage Dispersion," Working papers 97-25, Massachusetts Institute of Technology (MIT), Department of Economics.
- Acemoglu, Daron & Shimer, Robert, 1997. "Efficient Wage Dispersion," CEPR Discussion Papers 1572, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)

Find related papers by JEL classification:
D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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.)

Gerard J. van den Berg, 1999. "Multiple Equilibria and Minimum Wages in Labor Markets with Informational Frictions and Heterogeneous Production Technologies," Tinbergen Institute Discussion Papers 99-085/3, Tinbergen Institute. [Downloadable!]
Other versions:
- van den Berg, Gerard J., 2003. "Multiple Equilibria and Minimum Wages in Labor Markets with Informational Frictions and Heterogeneous Production Technologies," IZA Discussion Papers 806, Institute for the Study of Labor (IZA). [Downloadable!]
- Berg, Gerard J. van den, 1999. "Multiple equilibria and minimum wages in labor markets with informational frictions and heterogeneous production technologies," Serie Research Memoranda 0044, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics. [Downloadable!]
- van den Berg, Gerard J, 2003. "Multiple Equilibria and Minimum Wages in Labour Markets with Informational Frictions and Heterogenous Production Technologies," CEPR Discussion Papers 3977, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
- Gerard J. van den Berg, 2003. "Multiple Equilibria and Minimum Wages in Labor Markets with Informational Frictions and Heterogeneous Production Technologies," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(4), pages 1337-1357, November. [Downloadable!] (restricted)
Daron Acemoglu & Robert Shimer, 1998. "Efficient Unemployment Insurance," NBER Working Papers 6686, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
Other versions:
- Acemoglu, D. & Shimer, R., 1997. "Efficient Unemployment Insurance," Working papers 97-9, Massachusetts Institute of Technology (MIT), Department of Economics.
- Daron Acemoglu & Robert Shimer, 1999. "Efficient Unemployment Insurance," Journal of Political Economy, University of Chicago Press, vol. 107(5), pages 893-928, October. [Downloadable!] (restricted)
Ramon Marimon & Fabrizio Zilibotti, 1997. "Unemployment vs. Mismatch of Talents: Reconsidering Unemployment Benefits," NBER Working Papers 6038, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
Other versions:
- Marimon, Ramon & Zilibotti, Fabrizio, 1998. "Unemployment vs. Mismatch of Talents: Reconsidering Unemployment Benefits," Seminar Papers 661, Stockholm University, Institute for International Economic Studies. [Downloadable!]
- Ramon Marimon & Fabrizio Zilibotti, 1997. "Unemployment vs. Mismatch of Talents: Reconsidering Unemployment Benefits," Economics Working Papers 211, Department of Economics and Business, Universitat Pompeu Fabra. [Downloadable!]
- Marimon, Ramon & Zilibotti, Fabrizio, 1999. "Unemployment vs. Mismatch of Talents: Reconsidering Unemployment Benefits," Economic Journal, Royal Economic Society, vol. 109(455), pages 266-91, April. [Downloadable!] (restricted)
Daron Acemoglu, 1998. "Changes in Unemployment and Wage Inequality: An Alternative Theory and Some Evidence," NBER Working Papers 6658, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
Other versions:
- Acemoglu, D., 1996. "Changes in Unemployment and Wage Inequality: An Alternative Theory and Some Evidence," Working papers 96-15, Massachusetts Institute of Technology (MIT), Department of Economics.
- Acemoglu, Daron, 1996. "Changes in Unemployment and Wage Inequality: An Alternative Theory and Some Evidence," CEPR Discussion Papers 1459, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
- Daron Acemoglu, 1999. "Changes in Unemployment and Wage Inequality: An Alternative Theory and Some Evidence," American Economic Review, American Economic Association, vol. 89(5), pages 1259-1278, December. [Downloadable!] (restricted)
Postel-Vinay, Fabien & Robin, Jean-Marc, 2002. "Equilibrium Wage Dispersion with Worker and Employer Heterogeneity," CEPR Discussion Papers 3548, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
Other versions:
- 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)
Postel Vinay Fabien & Robin Jean Marc, 2000. "Wage Dispersion with Heterogeneous Firm Technologies and Worker Abilities: An Equilibrium Job Search Model for Matched Employer-Employee Data," Research Unit Working Papers 0008, Laboratoire d'Economie Appliquee, INRA. [Downloadable!]

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This page was last updated on 2009-11-6.

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