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Note on the Determinants of Wage Dispersion


  • Yosuke Oda

    () (Graduate school of Economics, Osaka university)


The purpose of this note is to explain theoretically the observed entire density of wages which is hump-shaped and right-skewed. I extend the model brought up by Halko et al . (2008) to introduce heterogeneity of firm fs productivity. It causes a difference in the support of wage offers, a wider (narrower) range for high (low) productivity firms. The different support roughly results in the observed wage dispersion because low wage offers are made by all firms (right-skewed), whereas high wage offers are made by only high producivity firms.

Suggested Citation

  • Yosuke Oda, 2008. "Note on the Determinants of Wage Dispersion," Discussion Papers in Economics and Business 08-37, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).
  • Handle: RePEc:osk:wpaper:0837

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    References listed on IDEAS

    1. Bontemps, Christian & Robin, Jean-Marc & van den Berg, Gerard J, 2000. "Equilibrium Search with Continuous Productivity Dispersion: Theory and Nonparametric Estimation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 41(2), pages 305-358, May.
    2. Marja-Liisa Halko & Klaus Kultti & and Juha Virrankoski, 2008. "Search Direction And Wage Dispersion," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 49(1), pages 111-134, February.
    3. Daron Acemoglu & Robert Shimer, 2000. "Wage and Technology Dispersion," Review of Economic Studies, Oxford University Press, vol. 67(4), pages 585-607.
    4. James D. Montgomery, 1991. "Equilibrium Wage Dispersion and Interindustry Wage Differentials," The Quarterly Journal of Economics, Oxford University Press, vol. 106(1), pages 163-179.
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    More about this item


    search; matching; wage posting; wage dispersion;

    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

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