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Wage Dispersion and Wage Dynamics Within and Across Firms

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  • Eric Smith

    (University of Essex)

  • Carlos Carrillo Tudela

    (University of Leicester)

Abstract

This paper examines wage dispersion and wage dynamics with stock-flow matching and on-the-job search. Under stock-flow matching, a searcher immediately becomes fully informed about the number of viable firms in the stock of job vacancies. If only one option is available, monopsony wages result. With more than one firm bidding, Bertrand wages arise. Over time turnover causes this historical impact to fade. Wage dispersion declines with tenure. The model also generates job-to-job transitions with both wage cuts and jumps.

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Bibliographic Info

Paper provided by Society for Economic Dynamics in its series 2007 Meeting Papers with number 615.

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Date of creation: 2007
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Handle: RePEc:red:sed007:615

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  1. Burdett, Ken & Coles, Melvyn, 2010. "Wage/tenure contracts with heterogeneous firms," Journal of Economic Theory, Elsevier, vol. 145(4), pages 1408-1435, July.
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  3. Fabien Postel-Vinay & Helene Turon, 2006. "On-the-job Search, Productivity Shocks, and the Individual Earnings Process," 2006 Meeting Papers 5, Society for Economic Dynamics.
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  27. repec:boc:bocoec:543 is not listed on IDEAS
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