Matching, Specialties and Wage Inequality

Konstantinos Eleftheriou

Economics Bulletin, 2008, vol. 10, issue 11, 1-12

Abstract: Empirical evidence show that there is a negative relation between policies that accelerate the matching process in labor market and "within-group" wage inequality. We apply the standard "search and matching" framework to construct a labor market model with ex-ante heterogeneous workers, so as to examine and interpret this phenomenon. We show that a composition effect working through the effective rate of employment opportunities (decision pattern through which individuals accept or reject jobs in which they are less specialized) is responsible for the increase in within group inequality as matching process is accelerated.

Keywords: wage; inequality (search for similar items in EconPapers)
JEL-codes: J0 (search for similar items in EconPapers)
Date: 2008-08-11
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Citations: View citations in EconPapers (2)

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