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Note on the Determinants of Wage Dispersion

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  • Yosuke Oda

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    (Graduate school of Economics, Osaka university)

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    Abstract

    The purpose of this note is to explain theoretically the observed entire density of wages which is hump-shaped and right-skewed. I extend the model brought up by Halko et al . (2008) to introduce heterogeneity of firmfs productivity. It causes a difference in the support of wage offers, a wider (narrower) range for high (low) productivity firms. The different support roughly results in the observed wage dispersion because low wage offers are made by all firms (right-skewed), whereas high wage offers are made by only high producivity firms.

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    File URL: http://www2.econ.osaka-u.ac.jp/library/global/dp/0837.pdf
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    Bibliographic Info

    Paper provided by Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP) in its series Discussion Papers in Economics and Business with number 08-37.

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    Length: 12 pages
    Date of creation: Dec 2008
    Date of revision:
    Handle: RePEc:osk:wpaper:0837

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    Web page: http://www.econ.osaka-u.ac.jp/
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    Keywords: search; matching; wage posting; wage dispersion;

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    1. Acemoglu, Daron & Shimer, Robert, 2000. "Wage and Technology Dispersion," Review of Economic Studies, Wiley Blackwell, vol. 67(4), pages 585-607, October.
    2. Bontemps, Christian & Robin, Jean-Marc & van den Berg, Gerard J, 2000. "Equilibrium Search with Continuous Productivity Dispersion: Theory and Nonparametric Estimation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 41(2), pages 305-58, May.
    3. Marja-Liisa Halko & Klaus Kultti & and Juha Virrankoski, 2008. "Search Direction And Wage Dispersion," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 49(1), pages 111-134, 02.
    4. Montgomery, James D, 1991. "Equilibrium Wage Dispersion and Interindustry Wage Differentials," The Quarterly Journal of Economics, MIT Press, vol. 106(1), pages 163-79, February.
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