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Sequential job posting and equilibrium wage dispersion with bunching

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  • Guo, Junjie

Abstract

In a model where new jobs cannot start until some time in the future, we show that firms post vacancies in advance when the match surplus is high, and they post more vacancies but lower wages as the job starting time gets closer. The number of vacancies increases over time because firms prefer to pay the vacancy cost later rather than sooner. Wages decrease over time because vacancies posted early have to compete with a larger number of vacancies posted later. An equilibrium wage distribution with both a continuous component and a mass point exists even with identical and rational agents on both sides of the market. Wage dispersion is generated by the inter-temporal competition between vacancies posted at different times, and a mass point emerges due to the lack of wage competition among vacancies posted at the same time. Consistent with the model, we find college students who graduate in May are more likely to receive an offer in April than March, and the distribution of wage offers received in March first-order stochastically dominates the distribution of wage offers received in April.

Suggested Citation

  • Guo, Junjie, 2024. "Sequential job posting and equilibrium wage dispersion with bunching," Labour Economics, Elsevier, vol. 87(C).
    • Handle: RePEc:eee:labeco:v:87:y:2024:i:c:s0927537123001641
    DOI: 10.1016/j.labeco.2023.102489
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    More about this item

    Keywords

    Intertemporal choice; Job search; Minimum wage; Wage dispersion;
    All these keywords.

    JEL classification:

    • D25 - Microeconomics - - Production and Organizations - - - Intertemporal Firm Choice: Investment, Capacity, and Financing
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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