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Equilibrium Unemployment with Wage Posting: Burdett-Mortensen Meet Pissarides

Author

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  • Mortensen, D.T.

Abstract

The wage posting approach to search equilibrium is incorporated into the equilibrium unemployment approach in the paper. The unique equilibrium to the wage posting game analysed is a distribution of wage offers of the same functional form as that originally derived by Burdett and Mortensen (1998). The synthesis is extended by allowing for match specific investment by employers. The outcome is endogenous productivity differences across jobs that are induced by equilibrium wage offer differences. Contrary to the original Burdett-Mortensen solution, the equilibrium wage offers distribution can be unimodal with a long right tail when match-specific investment are included.

Suggested Citation

  • Mortensen, D.T., 1998. "Equilibrium Unemployment with Wage Posting: Burdett-Mortensen Meet Pissarides," Papers 98-14, Centre for Labour Market and Social Research, Danmark-.
  • Handle: RePEc:fth:clmsre:98-14
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    Citations

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    Cited by:

    1. J. Ignacio Garcia-Perez, 2002. "Equilibrium search models: the role of the assumptions," Investigaciones Economicas, Fundación SEPI, vol. 26(2), pages 255-284, May.
    2. van den Berg, Gerard J. & van Vuuren, Aico, 2010. "The effect of search frictions on wages," Labour Economics, Elsevier, vol. 17(6), pages 875-885, December.
    3. Pierre Cahuc & Fabien Postel-Vinay & Jean-Marc Robin, 2006. "Wage Bargaining with On-the-Job Search: Theory and Evidence," Econometrica, Econometric Society, vol. 74(2), pages 323-364, March.
    4. Francesco Squintani, 1999. "On-the-Job Signaling and Self-Confidence," Discussion Papers 1274, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    5. Alok Kumar, 2008. "Inflation And The Dispersion Of Real Wages," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 49(2), pages 377-399, May.
    6. Koop, Gary, 2001. "Bayesian inference in models based on equilibrium search theory," Journal of Econometrics, Elsevier, vol. 102(2), pages 311-338, June.
    7. Sarah Le Duigou, 2012. "L'effet de l'âge sur la distribution des salaires," Revue française d'économie, Presses de Sciences-Po, vol. 0(1), pages 163-185.
    8. Giuseppe Bertola & Pietro Garibaldi, 2001. "Wages and the Size of Firms in Dynamic Matching Models," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 4(2), pages 335-368, April.
    9. Rao, Neel, 2015. "General training in labor markets: Common value auctions with unobservable investment," Journal of Economic Behavior & Organization, Elsevier, vol. 120(C), pages 19-45.
    10. repec:eee:labchp:v:3:y:1999:i:pb:p:2567-2627 is not listed on IDEAS
    11. Tamas Papp, 2013. "Frictional wage dispersion with Bertrand competition: an assessment," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 16(3), pages 540-552, July.
    12. Fabien Postel-Vinay & Jean-Marc Robin, 2002. "Equilibrium Wage Dispersion with Worker and Employer Heterogeneity," Econometrica, Econometric Society, vol. 70(6), pages 2295-2350, November.
    13. Morissette, Rene & Zhang, Xuelin, 2001. "Quelles entreprises ont des taux de vacance eleves au Canada?," Direction des etudes analytiques : documents de recherche 2001176f, Statistics Canada, Direction des etudes analytiques.
    14. Andrey Launov & Christian Holzner, 2005. "Search Equilibrium, Production Parameters and Social Returns to Education: Theory and Estimation," 2005 Meeting Papers 604, Society for Economic Dynamics.
    15. Morissette, Rene & Zhang, Xuelin, 2001. "Which Firms Have High Job Vacancy Rates in Canada?," Analytical Studies Branch Research Paper Series 2001176e, Statistics Canada, Analytical Studies Branch.
    16. Ambra Poggi, 2013. "Labor mobility network and intra firm wage dispersion," LABORatorio R. Revelli Working Papers Series 133, LABORatorio R. Revelli, Centre for Employment Studies.
    17. Pablo D. Fajgelbaum, 2013. "Labor Market Frictions, Firm Growth, and International Trade," NBER Working Papers 19492, National Bureau of Economic Research, Inc.
    18. Stéphane Carcillo, 2005. "Commentaire de l'article de A. Chéron, J.-O. Hairault et F. Langot," Revue Française d'Économie, Programme National Persée, vol. 19(4), pages 41-58.
    19. Mathias, HUNGERBUEHLER, 2004. "Tax Progression in Imperfect Labour Markets : A Survey," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2004032, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    20. Galindo-Rueda, Fernando, 2002. "Endogenous Wage and Capital Dispersion, On-the-Job Search and the Matching Technology," IZA Discussion Papers 625, Institute for the Study of Labor (IZA).
    21. Morissette, Rene & Rosa, Julio, 2003. "Alternative Work Practices and Quit Rates: Methodological Issues and Empirical Evidence for Canada," Analytical Studies Branch Research Paper Series 2003199e, Statistics Canada, Analytical Studies Branch.

    More about this item

    Keywords

    MODELS ; UNEMPLOYMENT ; WAGES Research. Science Park Aarhus Wieds Vej 10C; 8000 Aarhus C; Danmark. 16p.;

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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