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  • Espen Moen

    (Norwegian Business School-BI)

  • Anna Godøy

    (The Ragnar Frisch Centre for)

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    Abstract

    In search theory, an important distinction can be drawn between models with competitive search and with random search; empirical work on job search models overwhelmingly assume random search. This paper uses linked register data on workers and rms to explore patterns of wages at job to job transitions. We argue that models with random search provide insufficient structure to match the tight correspondence in the data between the rm wage in the old and the new job. In an archetypical model with directed on-the-job search, we nd that the pure job ladder equilibrium of this model is also unable to account for observed wage patterns, this time by predicting too little variation in the conditional distribution of new wages after a job change. Next, we present a model where workers and firms meet through both directed and undirected search; we call this mixed search. This model is qualitatively consistent with patterns of wages across job-to-job transitions with wage gains. To account for wage cuts at job-to-job transitions, an extended model version makes search behavior contingent on realized match specific productivity, revealed to workers and firms after the match is formed.

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    Bibliographic Info

    Paper provided by Society for Economic Dynamics in its series 2013 Meeting Papers with number 857.

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    Date of creation: 2013
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    Handle: RePEc:red:sed013:857

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    1. Cahuc, Pierre & Postel-Vinay, Fabien & Robin, Jean-Marc, 2003. "Wage Bargaining with On-The-Job Search: Theory and Evidence," CEPR Discussion Papers 4154, C.E.P.R. Discussion Papers.
    2. Dale T. Mortensen & Christopher A. Pissarides, 1993. "Job Creation and Job Destruction in the Theory of Unemployment," CEP Discussion Papers dp0110, Centre for Economic Performance, LSE.
    3. Pietro Garibaldi & Espen R. Moen, 2010. "Job to Job Movements in a Simple Search Model," American Economic Review, American Economic Association, vol. 100(2), pages 343-47, May.
    4. Espen R. Moen & �sa Rosén, 2004. "Does Poaching Distort Training?," Review of Economic Studies, Oxford University Press, vol. 71(4), pages 1143-1162.
    5. 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.
    6. Moen, Espen R & Rosen, Asa, 2002. "Does Poaching Distort Training?," CEPR Discussion Papers 3468, C.E.P.R. Discussion Papers.
    7. 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.
    8. Benjamin Lester, 2011. "Information and Prices with Capacity Constraints," American Economic Review, American Economic Association, vol. 101(4), pages 1591-1600, June.
    9. Veronica Guerrieri, 2008. "Inefficient Unemployment Dynamics under Asymmetric Information," Journal of Political Economy, University of Chicago Press, vol. 116(4), pages 667-708, 08.
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