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Selection Wages: An Example

Author

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  • Schlicht, Ekkehart

    () (University of Munich)

Abstract

Offering higher wages may enable firms to attract more applicants and screen them more carefully. If firms compete in this way in the labor market, "selection wages" emerge. This note illustrates this wage-setting mechanism. Selection wages may engender unconventional results, such as a pre-tax wage compression induced by the introduction of a progressive wage tax.

Suggested Citation

  • Schlicht, Ekkehart, 2006. "Selection Wages: An Example," IZA Discussion Papers 2507, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp2507
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    References listed on IDEAS

    as
    1. Phelps, Edmund S, 1995. "The Structuralist Theory of Employment," American Economic Review, American Economic Association, vol. 85(2), pages 226-231, May.
    2. Schlicht, Ekkehart, . "Job Rents in a Stylized Labor Market," Chapters in Economics, University of Munich, Department of Economics.
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    More about this item

    Keywords

    wage-tax; job-specific pay; wage formation; efficiency wage; incentive wage; mobility;

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs

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