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On-the-Job Search and the Wage Distribution

Author

Listed:
  • Bent Jesper Christensen

    (University of Aarhus)

  • Rasmus Lentz

    (Boston University)

  • Dale T. Mortensen

    (Northwestern University)

  • George R. Neumann

    (University of Iowa)

  • Axel Werwatz

    (German Institute for Economic Research and University of Potsdam)

Abstract

The article structually estimates an on-the-job search model of job separations. Given each employer pays observably equivalent workers the same but wages are dispersed across employers, an employer's separation flow is the sum of an exogenous outflow unrelated to the wage and a job-to-job flow that decreases with the employer's wage. Using data from the Danish Integrated Database for Labour Market Research, the empirical results imply, as predicted by theory, that search effort declines with the wage. Furthermore, the estimates explain the employment effect, defined as the horizontal difference between the distribution of wages earned and the wage offer distribution.

Suggested Citation

  • Bent Jesper Christensen & Rasmus Lentz & Dale T. Mortensen & George R. Neumann & Axel Werwatz, 2005. "On-the-Job Search and the Wage Distribution," Journal of Labor Economics, University of Chicago Press, vol. 23(1), pages 31-58, January.
  • Handle: RePEc:ucp:jlabec:v:23:y:2005:i:1:p:31-58
    DOI: 10.1086/425432
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    References listed on IDEAS

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