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Equilibrium Distribution of Labor Productivity

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  • AOYAMA Hideaki
  • IYETOMI Hiroshi
  • YOSHIKAWA Hiroshi

Abstract

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.

Suggested Citation

  • AOYAMA Hideaki & IYETOMI Hiroshi & YOSHIKAWA Hiroshi, 2012. "Equilibrium Distribution of Labor Productivity," Discussion papers 12041, Research Institute of Economy, Trade and Industry (RIETI).
  • Handle: RePEc:eti:dpaper:12041
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    References listed on IDEAS

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    1. Peter Diamond, 2011. "Unemployment, Vacancies, Wages," American Economic Review, American Economic Association, vol. 101(4), pages 1045-1072, June.
    2. Hiroshi Yoshikawa, 2003. "The Role of Demand in Macroeconomics," The Japanese Economic Review, Japanese Economic Association, vol. 54(1), pages 1-27.
    3. Dale T. Mortensen, 2011. "Markets with Search Friction and the DMP Model," American Economic Review, American Economic Association, vol. 101(4), pages 1073-1091, June.
    4. 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 (IfW), vol. 3, pages 1-10.
    5. Christopher A. Pissarides, 2011. "Equilibrium in the Labor Market with Search Frictions," American Economic Review, American Economic Association, vol. 101(4), pages 1092-1105, June.
    6. Hideaki Aoyama & Hiroshi Yoshikawa & Hiroshi Iyetomi & Yoshi Fujiwara, 2010. "Productivity dispersion: facts, theory, and implications," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 5(1), pages 27-54, June.
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