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Training, Search and Wage Dispersion

Author

Listed:
  • Chao Fu

    (University of Wisconsin-Madison)

Abstract

This paper combines on-the-job search and human capital theory to study the coexistence of firm-funded general training and frequent job turnovers. Although ex ante identical, firms differ in their training decisions. The model generates correlations between various firm characteristics that are consistent with the data. Wage dispersion exists among ex ante identical workers because workers of the same productivity are paid differently across firms, and because workers differ in their productivity ex post. Endogenous training breaks the perfect correlation between work experience and human capital, which yields new insights on wage dispersion and wage dynamics. (Copyright: Elsevier)

Suggested Citation

  • Chao Fu, 2011. "Training, Search and Wage Dispersion," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 14(4), pages 650-666, October.
  • Handle: RePEc:red:issued:10-77
    DOI: 10.1016/j.red.2010.11.003
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    References listed on IDEAS

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    1. Gary S. Becker, 1962. "Investment in Human Capital: A Theoretical Analysis," Journal of Political Economy, University of Chicago Press, vol. 70, pages 1-9.
    2. Ken Burdett & Melvyn Coles, 2003. "Equilibrium Wage-Tenure Contracts," Econometrica, Econometric Society, vol. 71(5), pages 1377-1404, September.
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    5. Jesper Bager & Francois Fontaine & Fabien Postel-Vinay & Jean-Marc Robin, 2006. "A Feasible Equilibrium Search Model of Individual Wage Dynamics with Experience Accumulation," 2006 Meeting Papers 679, Society for Economic Dynamics.
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    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. Kenneth Burdett & Carlos Carrillo‐Tudela & Melvyn G. Coles, 2011. "Human Capital Accumulation And Labor Market Equilibrium," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 52(3), pages 657-677, August.
    9. Katz, Eliakim & Ziderman, Adrian, 1990. "Investment in General Training: The Role of Information and Labour Mobility," Economic Journal, Royal Economic Society, vol. 100(403), pages 1147-1158, December.
    10. Helen Connolly & Peter Gottschalk, 2008. "Wage Cuts as Investment in Future Wage Growth," LABOUR, CEIS, vol. 22(1), pages 1-22, March.
    11. Lynch, Lisa M, 1992. "Private-Sector Training and the Earnings of Young Workers," American Economic Review, American Economic Association, vol. 82(1), pages 299-312, March.
    12. John M. Barron & Mark C. Berger & Dan A. Black, 1997. "On-the-Job Training," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number ojt, November.
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    15. Rubinstein, Yona & Weiss, Yoram, 2006. "Post Schooling Wage Growth: Investment, Search and Learning," Handbook of the Economics of Education, Elsevier.
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    Citations

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    Cited by:

    1. Rao, Neel, 2015. "General training in labor markets: Common value auctions with unobservable investment," Journal of Economic Behavior & Organization, Elsevier, vol. 120(C), pages 19-45.
    2. Rahmah Ismail & Zulridah Noor & Abd Awang, 2011. "Impact of Training under Human Resource Development Limited on Workers’ Mobility in Selected Malaysian Services Sector," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 1(2), pages 146-159, December.
    3. Ronald Wolthoff, 2014. "It'S About Time: Implications Of The Period Length In An Equilibrium Search Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 55, pages 839-867, August.
    4. Ambra, Poggi & Piergiovanna, Natale, 2017. "Learning by hiring, network centrality and within-firm wage dispersion," Working Papers 369, University of Milano-Bicocca, Department of Economics, revised 19 Aug 2017.
    5. Xiao, Chaoqun & Tang, Wansheng & Zhao, Ruiqing & Zhou, Chi, 2013. "Equilibrium search with heterogeneous firms, workers and endogenous human capital," MPRA Paper 52136, University Library of Munich, Germany.
    6. Rasmus Lentz, 2014. "Optimal Employment Contracts with Hidden Search," NBER Working Papers 19988, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    On-the-job search; On-the-job training; General human capital; Wage dispersion; Wage persistence; Wage growth;

    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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