Endogenous Job Destructions and the Distribution of Wages

Arnaud Cheron and Bénédicte Rouland

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Abstract: In this paper, we argue that ¯ring decisions of ¯rms can help ex- plain the shape of the wage distribution. To emphasize this result, we consider a matching model with both idiosyncratic productivity shocks that hit jobs and heterogeneity of workers according to ex ante unob- servable abilities. Computation experiments show that the model can generate a hump-shaped wage distribution despite assuming a uniform distribution of shocks and a Pareto distribution of abilities.

Keywords: wage distribution; matching model (search for similar items in EconPapers)
Date: 2010-08
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Journal Article: Endogenous job destructions and the distribution of wages (2011)
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