Equilibrium Wage Dispersion and Interindustry Wage Differentials

James D. Montgomery

The Quarterly Journal of Economics, 1991, vol. 106, issue 1, 163-179

Abstract: This paper develops a search-theoretic explanation of interindustry wage differentials. Given coordination problems in the labor market, the probability of filling a vacancy is an increasing function of the wage offered; in equilibrium, firms that find vacancies more costly will offer higher wages. The model thus explains the persistence of interindustry wage differentials and their correlation with industry-average capital-labor ratio and profitability. Additionally, the model predicts that high-wage firms will receive more applications per job opening and that wages in the labor market will behave as strategic complements.

Date: 1991
References: Add references at CitEc
Citations: View citations in EconPapers (239)

Downloads: (external link)
http://hdl.handle.net/10.2307/2937911 (application/pdf)
Access to full text is restricted to subscribers.

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

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:qjecon:v:106:y:1991:i:1:p:163-179.

Ordering information: This journal article can be ordered from
https://academic.oup.com/journals

Access Statistics for this article

The Quarterly Journal of Economics is currently edited by Robert J. Barro, Lawrence F. Katz, Nathan Nunn, Andrei Shleifer and Stefanie Stantcheva

More articles in The Quarterly Journal of Economics from President and Fellows of Harvard College
Bibliographic data for series maintained by Oxford University Press ().