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Rent Sharing in an Equilibrium Model of Matching and Turnover

  • McLaughlin, Kenneth J
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    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.

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    File URL: http://dx.doi.org/10.1086/298360
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    Article provided by University of Chicago Press in its journal Journal of Labor Economics.

    Volume (Year): 12 (1994)
    Issue (Month): 4 (October)
    Pages: 499-523

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    Handle: RePEc:ucp:jlabec:v:12:y:1994:i:4:p:499-523
    Contact details of provider: Web page: http://www.journals.uchicago.edu/JOLE/

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    1. 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 461-83, December.
    2. Buchanan, James M & Tollison, Robert D, 1981. "The Homogenization of Heterogeneous Inputs," American Economic Review, American Economic Association, vol. 71(1), pages 28-38, March.
    3. 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.
    4. Baker, Terence J. & Scott, Susan & Wren, A., 1991. "Quarterly Economic Commentary, Summer 1991," Forecasting Report, Economic and Social Research Institute (ESRI), number QEC19912, December.
    5. Solow, Robert M, 1985. " Insiders and Outsiders in Wage Determination," Scandinavian Journal of Economics, Wiley Blackwell, vol. 87(2), pages 411-28.
    6. Baker, Terence J. & Scott, Susan & Wren, A., 1991. "Quarterly Economic Commentary, Spring 1991," Forecasting Report, Economic and Social Research Institute (ESRI), number QEC19911, December.
    7. Baker, Terence J. & Scott, Susan & Wren, A, 1991. "Quarterly Economic Commentary, Autumn 1991," Forecasting Report, Economic and Social Research Institute (ESRI), number QEC19913, December.
    8. 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.
    9. Dale T. Mortensen, 1978. "Specific Capital, Bargaining, and Labor Turnover," Discussion Papers 320, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    10. 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.
    11. A. D. Roy, 1951. "Some Thoughts On The Distribution Of Earnings," Oxford Economic Papers, Oxford University Press, vol. 3(2), pages 135-146.
    12. 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 233-57, April.
    13. Dale T. Mortensen, 1978. "Specific Capital and Labor Turnover," Bell Journal of Economics, The RAND Corporation, vol. 9(2), pages 572-586, Autumn.
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