Efficient Wage Dispersion

Daron Acemoglu and Robert Shimer

Working papers from Massachusetts Institute of Technology (MIT), Department of Economics

Abstract: In market economies, identical workers appear to receive very different wages, violating the "law of one price" of Walrasian markets. We argue in this paper that in the absence of a Walrasian autioneers to coordinate trade": (i) wage dispersion among identical workers is very often an equilibrium phenomenon, (ii) such dispersion is necessary for market economy to function.

Keywords: WAGES; LABOUR MARKET (search for similar items in EconPapers)
JEL-codes: D83 J31 J41 (search for similar items in EconPapers)
Pages: 36 pages
Date: 1997
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Citations: View citations in EconPapers (8)

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Working Paper: Efficient Wage Dispersion (1997)
Working Paper: Efficient Wage Dispersion (1997)
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