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The Pricing of Job Characteristics When Markets Do Not Clear: Theory and Implications

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Author Info
Kevin Lang
Sumon Majumdar

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Abstract

This paper examines nonsequential search when jobs vary with respect to nonpecuniary characteristics. In the presence of frictions in the labor market, the equilibrium job distribution need not show evidence of compensating wage differentials. The model also generates several pervasive features of labor markets: unemployment and vacancies, apparent discrimination, and market segmentation. When workers are homogeneous, restrictions on the range of job offers decrease welfare and cannot reduce unemployment. However, when workers have heterogeneous preferences, such restrictions may lower unemployment and can even lead to a Pareto-improvement in welfare. We consider the impact of policies banning discrimination, regulating working-conditions and imposing a minimum wage.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 9911.

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Date of creation: Aug 2003
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Handle: RePEc:nbr:nberwo:9911

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Find related papers by JEL classification:
J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
J2 - Labor and Demographic Economics - - Demand and Supply of Labor

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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. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb.. [Downloadable!] (restricted)
  2. Rosen, Sherwin, 1987. "The theory of equalizing differences," Handbook of Labor Economics, in: O. Ashenfelter & R. Layard (ed.), Handbook of Labor Economics, edition 1, volume 1, chapter 12, pages 641-692 Elsevier. [Downloadable!] (restricted)
  3. Lang, Kevin, 1991. "Persistent Wage Dispersion and Involuntary Unemployment," The Quarterly Journal of Economics, MIT Press, vol. 106(1), pages 181-202, February. [Downloadable!] (restricted)
  4. Sattinger, Michael, 1979. "Differential Rents and the Distribution of Earnings," Oxford Economic Papers, Oxford University Press, vol. 31(1), pages 60-71, March. [Downloadable!] (restricted)
  5. Brown, Charles, 1980. "Equalizing Differences in the Labor Market," The Quarterly Journal of Economics, MIT Press, vol. 94(1), pages 113-34, February. [Downloadable!] (restricted)
  6. Kevin Lang & Robert W. Rosenthal, 1991. "The Contractors' Game," RAND Journal of Economics, The RAND Corporation, vol. 22(3), pages 329-338, Autumn. [Downloadable!] (restricted)
  7. Hwang, Hae-shin & Mortensen, Dale T & Reed, W Robert, 1998. "Hedonic Wages and Labor Market Search," Journal of Labor Economics, University of Chicago Press, vol. 16(4), pages 815-47, October. [Downloadable!] (restricted)
  8. Lucas, Robert E B, 1975. "Hedonic Price Functions," Economic Inquiry, Oxford University Press, vol. 13(2), pages 157-78, June.
  9. Altonji, Joseph G & Paxson, Christina H, 1988. "Labor Supply Preferences, Hours Constraints, and Hours-Wage Trade-Offs," Journal of Labor Economics, University of Chicago Press, vol. 6(2), pages 254-76, April. [Downloadable!] (restricted)
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  10. Hosios, Arthur J, 1986. "Layoffs, Recruitment, and Interfirm Mobility," Journal of Labor Economics, University of Chicago Press, vol. 4(4), pages 473-502, October. [Downloadable!] (restricted)
  11. Butters, Gerard R, 1977. "Equilibrium Distributions of Sales and Advertising Prices," Review of Economic Studies, Blackwell Publishing, vol. 44(3), pages 465-91, October. [Downloadable!] (restricted)
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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. Marloes de Graaf-Zijl, 2005. "Compensation of On-call and Fixed-term Employment: the Role of Uncertainty," Tinbergen Institute Discussion Papers 05-120/3, Tinbergen Institute. [Downloadable!]
  2. Petri Böckerman & Pekka Ilmakunnas, 2005. "Do Job Disamenities Raise Wages or Ruin Job Satisfaction?," Labor and Demography 0501001, EconWPA. [Downloadable!]
  3. Thomas J. Kniesner & James P. Ziliak & W. Kip Viscusi, 2004. "Life-Cycle Consumption and the Age-Adjusted Value of Life," NBER Working Papers 10266, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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