Exploring the Causes of Frictional Wage Dispersion
Standard search models are inconsistent with the amount of frictional wage dis- persion found in U.S. data. We resolve this apparent puzzle by modeling skill development (learning by doing on the job, skill loss during unemployment) and duration dependence in unemployment benefits in a random on the job search model featuring two-sided heterogeneity. The model's key parameters are calibrated using micro data on employment mobility and wages from the Survey of Income and Program Participation (SIPP). Our model is consistent with the amount of frictional wage dispersion found in the data. Skill develop- ment on the job is the most important driver behind this result. Meanwhile, firm heterogeneity never accounts for more than 20% of overall wage inequality within an age cohort.
|Date of creation:||May 2011|
|Contact details of provider:|| Postal: Bonn Graduate School of Economics, University of Bonn, Adenauerallee 24 - 26, 53113 Bonn, Germany|
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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Carlos Carrillo-Tudela, 2010.
"Job Search, Human Capital and Wage Inequality,"
2010 Meeting Papers
723, Society for Economic Dynamics.
- Carrillo-Tudela, Carlos, 2012. "Job Search, Human Capital and Wage Inequality," IZA Discussion Papers 6949, Institute for the Study of Labor (IZA).
- Carlos Carrillo-Tudela, 2012. "Job Search, Human Capital and Wage Inequality," CESifo Working Paper Series 3979, CESifo Group Munich.
- Carrillo-Tudela, Carlos, 2012. "Job search, human capital and wage inequality," ISER Working Paper Series 2012-23, Institute for Social and Economic Research.
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