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Wage Dispersion and Allocation of Jobs




This paper use Swedish establishment-level panel data on job turnover and wages to test the hypothesis of a positive relation between job reallocation and wage compression as proposed by Bertola & Rogerson (1997). The effect of wage dispersion on job turnover is negative and significant in the manufacturing sector. The wage compression effect is stronger on job destruction than on job creation, suggesting that wages are more rigid downward than upward. For the service sector results are reversed. Further results include (i) a strong positive relationship between the industry share of temporary employees and job turnover and (ii) a negative relationship between the amount of working-time flexibility and job reallocation. The estimation method is industry fixed-effect models that control for sector heterogeneity.

Suggested Citation

  • Heyman, Fredrik, 2001. "Wage Dispersion and Allocation of Jobs," SSE/EFI Working Paper Series in Economics and Finance 479, Stockholm School of Economics.
  • Handle: RePEc:hhs:hastef:0479

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    References listed on IDEAS

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    Cited by:

    1. Ilham Haouas & Mahmoud Yagoubi & Almas Heshmati, 2005. "The impacts of trade liberalization on employment and wages in Tunisian industries," Journal of International Development, John Wiley & Sons, Ltd., vol. 17(4), pages 527-551.
    2. Fredrik Heyman, 2008. "How Wage Compression Affects Job Turnover," Journal of Labor Research, Springer, vol. 29(1), pages 11-26, March.

    More about this item


    Job creation and job destruction; Wage dispersion; Temporary employment contracts.;

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs

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