Equilibrium Wage Dispersion: An Example

Damien Gaumont, Martin Schindler and Randall Wright

No 147, 2006 Meeting Papers from Society for Economic Dynamics

Abstract: Search models with posting and match-specific heterogeneity generate wage dispersion. Given K values for the match-specific variable, it is known that there are K reservation wages that could be posted, but generically never more than two actually are posted in equilibrium. What is unknown is when we get two wages, and which wages are actually posted. For an example with K = 3, we show equilibrium is unique; may have one wage or two; and when there are two, the equilibrium can display any combination of posted reservation wages, depending on parameters. We also show how wages, profits, and unemployment depend on productivity

Keywords: Search equilibrium; wage posting; wage dispersion; labor theory (search for similar items in EconPapers)
JEL-codes: D83 E24 J31 (search for similar items in EconPapers)
Date: 2006
New Economics Papers: this item is included in nep-dge, nep-lab and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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