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On the job search and the wage distribution

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  • Christensen, Bent Jesper
  • Mortensen, Dale
  • Neumann, George R.
  • Werwatz, Axel

Abstract

The estimates of the structural parameters of a job separations model derived from the theory of on-the-job search are reported in this papers. Given that each employer pays the same wage to all observably equivalent workers and that wage dispersion across employers exists in the sense that different employers offer different wages to the same worker, the theory implies that a firms separations outflow is the sum of an exogenous flow to unemployment and a job-to-job flow that decreases with the employer's wage. We find that the model provides a good description of job separation flows in our cross-firm sample drawn from the Danish Pay and Performance database for the year 1994- 1995. The estimates also explain most and in some cases all of the employment effect, defined as the difference between median wage earned by employed workers and the median wage offered by employers. Finally, the empirical results also provide estimates of the curvature of the cost of search function as well as the parameters of the separations equations. --

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Paper provided by Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes in its series SFB 373 Discussion Papers with number 2000,108.

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Date of creation: 2000
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Handle: RePEc:zbw:sfb373:2000108

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  1. Eran Yashiv, 2000. "The Determinants of Equilibrium Unemployment," American Economic Review, American Economic Association, vol. 90(5), pages 1297-1322, December.
  2. Bontemps, C. & Robin, J.M. & van den Berg, G.J., 1998. "Equilibrium Search with Continuous Productivity Dispersion: Theory and Non-Parametric Estimation," Papers 98-07, Centre for Labour Market and Social Research, Danmark-.
  3. Oi, Walter Y. & Idson, Todd L., 1999. "Firm size and wages," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 33, pages 2165-2214 Elsevier.
  4. Abowd, J.M. & Kramarz, F. & Margolis, D.N., 1995. "High-Wage Workers and High-Wage Firms," Cahiers de recherche 9503, Centre interuniversitaire de recherche en ├ęconomie quantitative, CIREQ.
  5. Nielsen, M.S. & Rosholm, M., 1999. "Wages, Training, and Job Turnover in a Search-Matching Model," Papers 99-03, Centre for Labour Market and Social Research, Danmark-.
  6. Bowlus, Audra J & Kiefer, Nicholas M & Neumann, George R, 2001. "Equilibrium Search Models and the Transition from School to Work," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 42(2), pages 317-43, May.
  7. Hoyt Bleakley & Ann E. Ferris & Jeffrey C. Fuhrer, 1999. "New data on worker flows during business cycles," New England Economic Review, Federal Reserve Bank of Boston, issue Jul, pages 49-76.
  8. Katharine G. Abraham & Henry S. Farber, 1986. "Job Duration, Seniority and Earnings," Working papers 407, Massachusetts Institute of Technology (MIT), Department of Economics.
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