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Search Frictions and Wage Dispersion

Author

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  • Yikai Wang

    (University of Oslo)

  • Iourii Manovskii

    (University of Pennsylvania)

  • Marcus Hagedorn

    (University of Oslo)

Abstract

We propose a way to measure the contribution of search frictions to the level of wage dispersion observed in the data. Using the data from the 1979 cohort of the National Longitudinal Survey of Youth we find that the variance of match qualities between workers and employers accounts for about 6% of the variance of log wages. Our method relies on a minimal set of assumptions, the main among them is that match quality is constant over the duration of a job. We show that this assumption can be verified empirically and is supported by the data.

Suggested Citation

  • Yikai Wang & Iourii Manovskii & Marcus Hagedorn, 2017. "Search Frictions and Wage Dispersion," 2017 Meeting Papers 1629, Society for Economic Dynamics.
    • Handle: RePEc:red:sed017:1629
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    References listed on IDEAS

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    Cited by:

    1. Philip Jung & Moritz Kuhn, 2019. "Earnings Losses and Labor Mobility Over the Life Cycle," Journal of the European Economic Association, European Economic Association, vol. 17(3), pages 678-724.
    2. Sebastien Menard, 2019. "The impact of benefit sanctions on equilibrium wage dispersion and job vacancies," TEPP Working Paper 2019-08, TEPP.
    3. Axel Gottfries & Coen N. Teulings, 2017. "Returns to On-The-Job Search and the Dispersion of Wages," CESifo Working Paper Series 6410, CESifo.
    4. Gottfries, Axel & Teulings, Coen, 2023. "Returns to on-the-job search and wage dispersion," Labour Economics, Elsevier, vol. 80(C).
    5. Axel Gottfries & Coen N. Teulings, 2016. "Returns to on-the-job search and the dispersion of wages," Discussion Papers 1629, Centre for Macroeconomics (CFM).
    6. Gottfries, A. & Teulings, T., 2017. "Returns to On-the-Job Search and the Dispersion of Wages," Cambridge Working Papers in Economics 1737, Faculty of Economics, University of Cambridge.
    7. Gottfries, Axel & Teulings, Coen, 2016. "Returns to on-the-job search and the dispersion of wages," LSE Research Online Documents on Economics 86219, London School of Economics and Political Science, LSE Library.
    8. Gottfries, Axel & Teulings, Coen, 2017. "Returns to On-the-Job Search and the Dispersion of Wages," IZA Discussion Papers 10668, Institute of Labor Economics (IZA).
    9. Teulings, Coen & Gottfries, Axel, 2017. "Returns to on-the-job search and the dispersion of wages," CEPR Discussion Papers 11921, C.E.P.R. Discussion Papers.

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