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The effect of Search Frictions on Wages

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  • Gérard J, Van den Berg

    (Crest)

  • Aico Van Vuuren

    (Crest)

Abstract

Labor market theories allowing for search frictions make marked predic-tions on the e ect of the degree of frictions on wages. Often, the e ect ispredicted to be negative. Despite the popularity of these theories, this hasnever been tested. We perform tests with matched worker- rm data. Theworker data are informative on individual wages and labor market transi-tions, and this allows for estimation of the degree of search frictions. The rm data are informative on labor productivity. The matched data pro-vide the skill composition in di erent markets. Together this allows us toinvestigate how the mean di erence between labor productivity and wagesin a market depends on the degree of frictions and other determinants. Wecorrect for worker self-selection into high-wage jobs. Using within-marketvariation, we also investigate the extent of (and explanations for) positiveassortative matching.

Suggested Citation

  • Gérard J, Van den Berg & Aico Van Vuuren, 2003. "The effect of Search Frictions on Wages," Working Papers 2003-29, Center for Research in Economics and Statistics.
  • Handle: RePEc:crs:wpaper:2003-29
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    Cited by:

    1. Mendes, Rute & van den Berg, Gerard J. & Lindeboom, Maarten, 2010. "An empirical assessment of assortative matching in the labor market," Labour Economics, Elsevier, vol. 17(6), pages 919-929, December.
    2. Jeremy Lise & Costas Meghir & Jean-Marc Robin, 2016. "Matching, Sorting and Wages," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 19, pages 63-87, January.
    3. Webber, Douglas A., 2015. "Firm market power and the earnings distribution," Labour Economics, Elsevier, vol. 35(C), pages 123-134.
    4. Philipp Ehrl, 2014. "High-wage workers and high-productivity firms - a regional view on matching in Germany," Working Papers 149, Bavarian Graduate Program in Economics (BGPE).
    5. Jeremy Lise & Costas Meghir & Jean-Marc Robin, 2013. "Mismatch, Sorting and Wages Dynamics," Sciences Po publications info:hdl:2441/32h1padvln8, Sciences Po.
    6. Gautier, Pieter A. & Muller, Paul & van der Klaauw, Bas & Rosholm, Michael & Svarer, Michael, 2012. "Estimating Equilibrium Effects of Job Search Assistance," IZA Discussion Papers 6748, Institute for the Study of Labor (IZA).
    7. Picchio, Matteo & van Ours, Jan C., 2011. "Market imperfections and firm-sponsored training," Labour Economics, Elsevier, vol. 18(5), pages 712-722, October.
    8. Torres, Sónia & Portugal, Pedro & Addison, John T. & Guimaraes, Paulo, 2013. "The Sources of Wage Variation: A Three-Way High-Dimensional Fixed Effects Regression Model," IZA Discussion Papers 7276, Institute for the Study of Labor (IZA).
    9. repec:spo:wpecon:info:hdl:2441/6ggbvnr6munghes9od0s108ro is not listed on IDEAS
    10. Garloff, Alfred, 2003. "Lohndispersion und Arbeitslosigkeit: Neuere Ansätze in der Suchtheorie," ZEW Discussion Papers 03-60, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    11. Fontaine, François, 2008. "Why are similar workers paid differently? the role of social networks," Journal of Economic Dynamics and Control, Elsevier, vol. 32(12), pages 3960-3977, December.
    12. Paul Frijters & Michael A. Shields, 2010. "Are Early Educational Choices Affected by Unemployment Benefits? New Theory," Discussion Papers Series 447, School of Economics, University of Queensland, Australia.
    13. Sónia Torres & John T. Addison & Paulo Guimarães & Pedro Portugal, 2013. "The sources of wage variation: a three-way high-dimensional fixed effects regression model," Working Papers w201309, Banco de Portugal, Economics and Research Department.

    More about this item

    JEL classification:

    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers
    • J4 - Labor and Demographic Economics - - Particular Labor Markets
    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling

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