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Wage Dispersion and Overqualification as Entailed by Reder Competition

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  • Schlicht, Ekkehart

Abstract

The expansion of higher education in the Western countries has been accompanied by a marked widening of wage differentials and increasing overqualification. While the increase in wage differentials has been attributed to skill-biased technological change that made advanced skills scarce, this explanation does not fit well with the observed increase in overqualification which suggests that advanced skills are in excess supply. By "Reder-competition" I refer to the simultaneous adjustment of wage offers and hiring standards in response to changing labor market condition. I present a simple model of Reder competition that reproduces the simultaneous increase in wage differentials and overqualification in response to an increase in education.

Suggested Citation

  • Schlicht, Ekkehart, 2007. "Wage Dispersion and Overqualification as Entailed by Reder Competition," Discussion Papers in Economics 1976, University of Munich, Department of Economics.
    • Handle: RePEc:lmu:muenec:1976
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    References listed on IDEAS

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    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Krugman und der Mindestlohn
      by Ekkehart Schlicht in Funktionale Staatsfinanzen on 2013-02-18 22:42:00
    2. Überqualifikation
      by Ekkehart Schlicht in Funktionale Staatsfinanzen on 2018-03-11 08:17:00
    3. Die Wirkunng der Besteuerung von Spitzeneinkommen und die Selektionstheorie der Lohnbildung
      by Ekkehart Schlicht in Funktionale Staatsfinanzen on 2022-12-15 16:56:00
    4. Die Reservearmee der Überqualifizierten
      by Ekkehart Schlicht in Funktionale Staatsfinanzen on 2015-10-18 15:25:00

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    Cited by:

    1. Johannes Ludsteck, 2014. "Exploiting Regional Heterogeneity to Test Wage Setting Theories - Firm Size Wage Effects in Urban and Rural Regions," ERSA conference papers ersa14p374, European Regional Science Association.
    2. Ayako Saiki & Jon Frost, 2014. "How does unconventional monetary policy affect inequality? Evidence from Japan," DNB Working Papers 423, Netherlands Central Bank, Research Department.
    3. Ayako Saiki & Jon Frost, 2014. "Does unconventional monetary policy affect inequality? Evidence from Japan," Applied Economics, Taylor & Francis Journals, vol. 46(36), pages 4445-4454, December.

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    More about this item

    Keywords

    Hiring standards; employment criteria; selection wages; efficiency wages; mobility; skill-biased technical change; overeducation; wage dispersion; Reder competition;
    All these keywords.

    JEL classification:

    • 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
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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