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Equilibrium Wage Dispersion, Firm Size and Growth

Author

Listed:
  • Melvyn G. Coles

    (University of Essex and Institut d'Analisi Economica (Barcelona))

Abstract

This paper analyses a model of equilibrium wage dynamics and wage dispersion across firms. It considers a labour market where firms set wages and workers use on-the-job search to look for better paid work. It analyses a perfect equilibrium where each firm can change its wage paid at any time, and workers use optimal quit strategies. Firms trade off higher wages against a lower quit rate and large firms (those with more employees) always pay higher wages than small firms. Non steady state dispersed price equilibria are also analysed which descrive how wages vary as each firm and the industry as a whole grows over time. (Copyright: Elsevier)

Suggested Citation

  • Melvyn G. Coles, 2001. "Equilibrium Wage Dispersion, Firm Size and Growth," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 4(1), pages 159-187, January.
    • Handle: RePEc:red:issued:v:4:y:2001:i:1:p:159-187
    DOI: 10.1006/redy.2000.0106
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    References listed on IDEAS

    as
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    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts

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