Equilibrium Wage Dispersion, Firm Size and Growth

Melvyn Coles

Review of Economic Dynamics, 2001, vol. 4, issue 1, 159-187

Abstract: This paper analyses a model of equilibrium wage dynamics and wage dispersion across firms. It considers a labour market where firms set wages and workers use on-the-job search to look for better paid work. It analyses a perfect equilibrium where each firm can change its wage paid at any time, and workers use optimal quit strategies. Firms trade off higher wages against a lower quit rate and large firms (those with more employees) always pay higher wages than small firms. Non steady state dispersed price equilibria are also analysed which descrive how wages vary as each firm and the industry as a whole grows over time. (Copyright: Elsevier)

Keywords: on-the-job search; wage dispersion; perfect equilibrium (search for similar items in EconPapers)
JEL-codes: D43 J41 (search for similar items in EconPapers)
Date: 2001
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Citations: View citations in EconPapers (58)

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Persistent link: https://EconPapers.repec.org/RePEc:red:issued:v:4:y:2001:i:1:p:159-187

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DOI: 10.1006/redy.2000.0106

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