Job search, human capital and wage inequality

Carlos Carrillo-Tudela

No 2012-23, ISER Working Paper Series from Institute for Social and Economic Research

Abstract: This paper constructs and quantitatively assesses an equilibrium search model with on-the- job search and general human capital accumulation. In the model workers differ in their innate abilities and firms in their productivities. Wages are dispersed because of search frictions and workers’ productivity differentials. Using the (log) wage variance decomposition implied by the model I show that wage inequality among low skilled workers is mostly driven by differences in their productivities. Among medium skilled workers, productivity differentials and search frictions are equally important. The model reproduces the observed cross-sectional wage distribution, the average wage-experience profile and the observed Mean-min ratio.

Date: 2012-10-22
New Economics Papers: this item is included in nep-dge, nep-hrm and nep-lab
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Related works:
Working Paper: Job Search, Human Capital and Wage Inequality (2012)
Working Paper: Job Search, Human Capital and Wage Inequality (2012)
Working Paper: Job Search, Human Capital and Wage Inequality (2010)
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