The distribution of earnings in an equilibrium search model with state-dependent offers and counteroffers

Gilles Postel-Vinay and Jean-Marc Robin
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Gilles Postel-Vinay: PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris-Jourdan Sciences Economiques - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique

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Abstract: We construct an equilibrium job search model with on-the-job search in which firms implement optimal-wage strategies under full information in the sense that they leave no rent to their employees and counter the offers received by their employees from competing firms. Productivity dispersion across firms results in wage mobility both within and across firms. Workers may accept wage cuts to move to firms offering higher future wage prospects. Equilibrium productivity dispersion across ex ante homogeneous firms can be endogenously generated. Productivity dispersion then generates a nontrivial wage distribution which is generically thin-tailed, as typically observed in the data.

Date: 2002-11
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Published in International Economic Review, 2002, 43 (4), pp.989 - 1016. ⟨10.1111/1468-2354.t01-1-00045⟩

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Related works:
Journal Article: The Distribution of Earnings in an Equilibrium Search Model with State-Dependent Offers and Counteroffers (2002)
Working Paper: The Distribution of Earnings in an Equilibrium Search Model with State-Dependent Offers and Counteroffers (2002)
Working Paper: The Distribution of Earnings in an Equilibrium Search Model with State-Dependent Offers and Counteroffers (2002)
Working Paper: The distribution of earnings in an equilibrium search model with state-dependent offers and counteroffers (2002)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:pseptp:hal-03416837

DOI: 10.1111/1468-2354.t01-1-00045

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