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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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    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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