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Rent Sharing in an Equilibrium Model of Matching and Turnover

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  • McLaughlin, Kenneth J

Abstract

This article characterizes labor markets in which the heterogeneity of workers and firms results in thin markets and rents. Neoclassical marginal analysis and matching are blended into a computable general equilibrium model of trade in efficiency units of labor. Although workers' bargaining problems are interrelated, a simple wage contract generates wage flexibility and efficient matching in the model's equilibrium. Equilibrium wages are predicted to vary with the diversity of firms, the scarcity of skills, and the costliness of search. The model is applied to superstar markets, union bargaining in sports, interindustry wage differentials, and the relationship between pay and profit. Copyright 1994 by University of Chicago Press.

Suggested Citation

  • McLaughlin, Kenneth J, 1994. "Rent Sharing in an Equilibrium Model of Matching and Turnover," Journal of Labor Economics, University of Chicago Press, vol. 12(4), pages 499-523, October.
  • Handle: RePEc:ucp:jlabec:v:12:y:1994:i:4:p:499-523
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    1. Masanori Hashimoto & Ben T. Yu, 1980. "Specific Capital, Employmemt Contracts, and Wage Rigidity," Bell Journal of Economics, The RAND Corporation, vol. 11(2), pages 536-549, Autumn.
    2. Grossman, Sanford J, 1981. "The Informational Role of Warranties and Private Disclosure about Product Quality," Journal of Law and Economics, University of Chicago Press, vol. 24(3), pages 461-483, December.
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    4. Dale T. Mortensen, 1978. "Specific Capital, Bargaining, and Labor Turnover," Discussion Papers 320, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    5. Richard Layard & Stephen Nickell, 1990. "Is Unemployment Lower if Unions Bargain over Employment?," The Quarterly Journal of Economics, Oxford University Press, vol. 105(3), pages 773-787.
    6. Hall, Robert E & Lazear, Edward P, 1984. "The Excess Sensitivity of Layoffs and Quits to Demand," Journal of Labor Economics, University of Chicago Press, vol. 2(2), pages 233-257, April.
    7. Baker, Terence J. & Scott, Susan & Wren, A., 1991. "Quarterly Economic Commentary, Spring 1991," Forecasting Report, Economic and Social Research Institute (ESRI), number QEC19911, April.
    8. A. D. Roy, 1951. "Some Thoughts On The Distribution Of Earnings," Oxford Economic Papers, Oxford University Press, vol. 3(2), pages 135-146.
    9. Dale T. Mortensen, 1978. "Specific Capital and Labor Turnover," Bell Journal of Economics, The RAND Corporation, vol. 9(2), pages 572-586, Autumn.
    10. Erica L. Groshen, 1991. "Sources of Intra-Industry Wage Dispersion: How Much Do Employers Matter?," The Quarterly Journal of Economics, Oxford University Press, vol. 106(3), pages 869-884.
    11. Solow, Robert M, 1985. " Insiders and Outsiders in Wage Determination," Scandinavian Journal of Economics, Wiley Blackwell, vol. 87(2), pages 411-428.
    12. Baker, Terence J. & Scott, Susan & Wren, A., 1991. "Quarterly Economic Commentary, Summer 1991," Forecasting Report, Economic and Social Research Institute (ESRI), number QEC19912, April.
    13. Baker, Terence J. & Scott, Susan & Wren, A, 1991. "Quarterly Economic Commentary, Autumn 1991," Forecasting Report, Economic and Social Research Institute (ESRI), number QEC19913, April.
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    Cited by:

    1. Kuhn, Johan Moritz, 2007. "My Pay is Too Bad (I Quit). Your Pay is Too Good (You're Fired)," Working Papers 07-5, University of Aarhus, Aarhus School of Business, Department of Economics.
    2. Davis, Steven J., 1997. "Sorting, learning, and mobility when jobs have scarcity value : A comment," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 46(1), pages 327-337, June.
    3. Kuckulenz, Anja, 2006. "Wage and Productivity Effect of Continuing Training in Germany: A Sectoral Analysis," ZEW Discussion Papers 06-025, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    4. Alexandre Léné, 2002. "Enterprise-related training and poaching externalities," Post-Print halshs-00150509, HAL.
    5. Alex Bryson & Giambattista Rossi & Rob Simmons, 2012. "Why Are Migrants Paid More?," CEP Discussion Papers dp1134, Centre for Economic Performance, LSE.
    6. Ireland, Norman & Merzoni, Guido, 1999. "Economic Integration And Human Capital Investment," The Warwick Economics Research Paper Series (TWERPS) 534, University of Warwick, Department of Economics.
    7. Isabelle Sin & Steven Stillman & Richard Fabling, 2017. "What drives the gender wage gap? Examining the roles of sorting, productivity differences, and discrimination," Working Papers 17_15, Motu Economic and Public Policy Research.
    8. Alexandre Léné, 2005. "Détournements de main-d'œuvre et externalités de la formation dans un modèle de concurrence imparfaite," Post-Print halshs-00150687, HAL.

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