Job search skills, employer size and wages

Daniel Millimet

Applied Economics Letters, 2005, vol. 12, issue 2, 95-100

Abstract: Many theories concerning the underlying cause of the observed positive correlation between employer size and wages have been evaluated empirically, with a sizeable residual remaining unexplained. This study presents and tests a new theory: successful applicants for vacancies in larger employers possess greater job search skills and therefore are able to obtain a wage closer to their maximum potential wage. Empirical results confirm that differential job search abilities can account for approximately 20% of the difference in average observed wages across large and small employers.

Date: 2005
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DOI: 10.1080/1350485042000314316

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