Equilibrium Unemployment with Wage Posting: Burdett-Mortensen Meet Pissarides

Dale Mortensen

Working Papers from Centre for Labour Market and Social Research, Danmark-

Abstract: The wage posting approach to search equilibrium is incorporated into the equilibrium unemployment approach in the paper. The unique equilibrium to the wage posting game analysed is a distribution of wage offers of the same functional form as that originally derived by Burdett and Mortensen (1998). The synthesis is extended by allowing for match specific investment by employers. The outcome is endogenous productivity differences across jobs that are induced by equilibrium wage offer differences. Contrary to the original Burdett-Mortensen solution, the equilibrium wage offers distribution can be unimodal with a long right tail when match-specific investment are included.

Keywords: MODELS; UNEMPLOYMENT; WAGES Research. Science Park Aarhus Wieds Vej 10C, 8000 Aarhus C, Danmark. 16p. (search for similar items in EconPapers)
JEL-codes: D83 J31 J41 J64 (search for similar items in EconPapers)
Date: 1998
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Chapter: Equilibrium Unemployment with Wage Posting: Burdett-Mortensen Meet Pissarides (2000)
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