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Wage Dispersion and Search Behavior: The Importance of Nonwage Job Values

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  • Robert E. Hall
  • Andreas I. Mueller

Abstract

We use a rich new body of data on the experiences of unemployed job seekers to determine the sources of wage dispersion and to create a search model consistent with the acceptance decisions the job seekers made. We identify the distributions of four key variables: offered wages, offered nonwage job values, job seekers' nonwork alternatives, and job seekers' personal productivities. We find that, conditional on personal productivity, the standard deviation of offered log wages is moderate, at 0.24, whereas the dispersion of the offered nonwage component is substantially larger, at 0.34. The resulting dispersion of offered job values is 0.38.

Suggested Citation

  • Robert E. Hall & Andreas I. Mueller, 2018. "Wage Dispersion and Search Behavior: The Importance of Nonwage Job Values," Journal of Political Economy, University of Chicago Press, vol. 126(4), pages 1594-1637.
  • Handle: RePEc:ucp:jpolec:doi:10.1086/697739
    DOI: 10.1086/697739
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    1. Pierre Cahuc & Fabien Postel-Vinay & Jean-Marc Robin, 2006. "Wage Bargaining with On-the-Job Search: Theory and Evidence," Econometrica, Econometric Society, vol. 74(2), pages 323-364, March.
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    Cited by:

    1. Jean Flemming, 2018. "Costly Commuting and the Job Ladder," 2018 Meeting Papers 100, Society for Economic Dynamics.
    2. Isaac Sorkin, 2018. "Ranking Firms Using Revealed Preference," The Quarterly Journal of Economics, Oxford University Press, vol. 133(3), pages 1331-1393.
    3. Koenig, Felix & Manning, Alan & Petrongolo, Barbara, 2014. "Reservation wages and the wage flexibility puzzle," LSE Research Online Documents on Economics 60613, London School of Economics and Political Science, LSE Library.
    4. Belot, Michèle & Kircher, Philipp & Muller, Paul, 2021. "Eliciting Time Preferences When Income and Consumption Vary: Theory, Validation & Application to Job Search," IZA Discussion Papers 14091, Institute of Labor Economics (IZA).
    5. Mui, Preston & Schoefer, Benjamin, 2019. "The Aggregate Labor Supply Curve at the Extensive Margin: A Reservation Wedge Approach," CEPR Discussion Papers 14209, C.E.P.R. Discussion Papers.
    6. Ying Feng & David Lagakos & James E. Rauch, 2018. "Unemployment and Development," NBER Working Papers 25171, National Bureau of Economic Research, Inc.
    7. Andreas Kettemann & Andreas I. Mueller & Josef Zweimüller, 2018. "Vacancy durations and entry wages: evidence from linked vacancy-employer-employee data," ECON - Working Papers 312, Department of Economics - University of Zurich.
    8. Kesternich, Iris & Schumacher, H. & Siflinger, Bettina & Valder, Franziska, 2018. "Reservation Wages and Labor Supply," Other publications TiSEM 70120e32-12f5-447b-baa5-c, Tilburg University, School of Economics and Management.
    9. Mi Luo & Simon Mongey, 2019. "Assets and Job Choice: Student Debt, Wages, and Job Satisfaction," 2019 Meeting Papers 1220, Society for Economic Dynamics.
    10. Kumar, Krishna B. & Mahmud, Minhaj & Nataraj, Shanthi & Cho, Yoon Y., 2019. "Employer and Employee Preferences for Worker Benefits: Evidence from a Matched Survey on the Bangladesh Informal Sector," IZA Discussion Papers 12064, Institute of Labor Economics (IZA).
    11. Minhaj Mahmud & Italo A. Gutierrez & Krishna B. Kumar & Shanthi Nataraj, 2017. "What Aspects of Formality Do Workers Value? Evidence from a Choice Experiment in Bangladesh," Working Papers WR-1197, RAND Corporation.
    12. Mi Luo & Simon Mongey, 2019. "Assets and Job Choice: Student Debt, Wages and Amenities," NBER Working Papers 25801, National Bureau of Economic Research, Inc.
    13. Mazur, Karol, 2016. "Can welfare abuse be welfare improving?," Journal of Public Economics, Elsevier, vol. 141(C), pages 11-28.
    14. Ransom, Tyler, 2019. "Labor Market Frictions and Moving Costs of the Employed and Unemployed," IZA Discussion Papers 12139, Institute of Labor Economics (IZA).
    15. Potter, Tristan, 2021. "Learning and job search dynamics during the Great Recession," Journal of Monetary Economics, Elsevier, vol. 117(C), pages 706-722.
    16. R. Jason Faberman & Andreas I. Mueller & Ayşegül Şahin* & Giorgio Topa, 2020. "The Shadow Margins of Labor Market Slack," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 52(S2), pages 355-391, December.
    17. Ismail Baydur & Toshihiko Mukoyama, 2020. "Job Duration and Match Characteristics over the Business Cycle," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 37, pages 33-53, July.
    18. Chen Liang & Yili Hong & Bin Gu & Jing Peng, 2018. "Gender Wage Gap in Online Gig Economy and Gender Differences in Job Preferences," Working Papers 18-03, NET Institute.
    19. Brussevich, Masha, 2018. "Does trade liberalization narrow the gender wage gap? The role of sectoral mobility," European Economic Review, Elsevier, vol. 109(C), pages 305-333.

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    More about this item

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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