Compensating wage differentials, workers’ heterogeneity and imperfect competition in the labor market

Xavier Wauthy and Yves Zenou

No 1997005, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: In this paper, we explore a simple model which focuses on the joint role of workers’ heterogeneity and imperfect competition in the endogeneous formation of labor market equilibria. We show that, compared to the competitive case, imperfect competition leads to a misallocation of workers and to an increase of the level of unemployment when the population is heterogeneous. When workers are all identical, competitive and Nash allocations become the same.

Keywords: labor market structures; workers’ characteristics; wage setting (search for similar items in EconPapers)
Date: 1997-01-01
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Working Paper: Compensating Wage Differentials, Workers' Heterogeneity and Imperfect Competition in the Labor Market (1997)
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Persistent link: https://EconPapers.repec.org/RePEc:cor:louvco:1997005

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