Heterogeneity and the Distribution of Wages

The Warwick Economics Research Paper Series (TWERPS) from University of Warwick, Department of Economics

Abstract: A number of theories (search and efficiency wages) have been developed, in part, to explain why identically able workers are often paid different wages. However, when there is a minimum wage, they do not explain the resulting "spike" in the wage distribution. Our model's predictions are consistent with this evidence. We assume that workers are equally able but have heterogeneous preferences for non-wage characteristics, while employers have heterogeneous productivity characteristics. This results in a model of labor market oligopsony where "inside" and "outside" forces interact, producing wage dispersion as well as a spike at the minimum wage.

Date: Written 1999

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Access Statistics for this paper

More papers in The Warwick Economics Research Paper Series (TWERPS) from University of Warwick, Department of Economics
Contact information at EDIRC.
Series data maintained by Margaret Nash ().