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Equilibrium Distribution of Labor Productivity

  • AOYAMA Hideaki
  • IYETOMI Hiroshi
  • YOSHIKAWA Hiroshi
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    We construct a theoretical model for equilibrium distribution of workers across sectors with different labor productivity, assuming that a sector can accommodate a limited number of workers which depends only on its productivity. A general formula for such distribution of productivity is obtained, using the detail-balance condition necessary for equilibrium in the Ehrenfest-Brillouin model. We also carry out an empirical analysis on the average number of workers in given productivity sectors on the basis of an exhaustive dataset in Japan. The theoretical formula succeeds in explaining the two distinctive observational facts in a unified way, that is, a Boltzmann distribution with negative temperature on the low-to-medium productivity side and a decreasing part in a power-law form on the high productivity side.

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    Paper provided by Research Institute of Economy, Trade and Industry (RIETI) in its series Discussion papers with number 12041.

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    Length: 12 pages
    Date of creation: Jun 2012
    Date of revision:
    Handle: RePEc:eti:dpaper:12041
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    1. Pissarides, Christopher A., 2010. "Equilibrium in the Labour Market with Search Frictions," Nobel Prize in Economics documents 2010-9, Nobel Prize Committee.
    2. Dale T. Mortensen, 2011. "Markets with Search Friction and the DMP Model," American Economic Review, American Economic Association, vol. 101(4), pages 1073-91, June.
    3. Scalas, Enrico & Garibaldi, Ubaldo, 2009. "A Dynamic Probabilistic Version of the Aoki-Yoshikawa Sectoral Productivity Model," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy, vol. 3, pages 1-10.
    4. Peter Diamond, 2011. "Unemployment, Vacancies, Wages," American Economic Review, American Economic Association, vol. 101(4), pages 1045-72, June.
    5. Hideaki Aoyama & Hiroshi Yoshikawa & Hiroshi Iyetomi & Yoshi Fujiwara, 2010. "Productivity dispersion: facts, theory, and implications," Journal of Economic Interaction and Coordination, Springer, vol. 5(1), pages 27-54, June.
    6. Hiroshi Yoshikawa, 2003. "The Role of Demand in Macroeconomics," The Japanese Economic Review, Japanese Economic Association, vol. 54(1), pages 1-27.
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