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Compensating wage differentials in stable job matching equilibrium

Seungjin Han () and Shintaro Yamaguchi

Journal of Economic Behavior & Organization, 2015, vol. 114, issue C, 36-45

Abstract: This paper studies implicit pricing of non-wage job characteristics in the labor market using a two-sided matching model. It departs from the previous literature by allowing worker heterogeneity in productivity, which gives rise to a double transaction problem in a hedonic model. Deriving sufficient conditions under which assortative matching is the unique stable job-worker matching, we show that observed wage differentials between jobs reflect not only compensating wage differentials, but also worker productivity gaps between the jobs. We find that the job-worker matching pattern determines the extent to which compensating wage differentials are confounded with the worker productivity gap effect.

Keywords: Hedonic model; Heterogeneity; Two-sided matching; Matchingpattern; Wage differential; Equalizing difference; Worker productivity (search for similar items in EconPapers)
JEL-codes: C78 J31 (search for similar items in EconPapers)
Date: 2015
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Related works:
Working Paper: Compensating Wage Differentials in Stable Job Matching Equilibrium (2013) Downloads
Working Paper: Compensating Wage Differentials in Stable Job Matching Equilibrium (2013) Downloads
Working Paper: Compensating Wage Differentials in Stable Job Matching Equilibrium (2013) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:114:y:2015:i:c:p:36-45

DOI: 10.1016/j.jebo.2015.03.011

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