Wage Dispersion and Wage Dynamics Within and Across Firms

Eric Smith and Carlos Carrillo-Tudela

No 615, 2007 Meeting Papers from Society for Economic Dynamics

Abstract: This paper examines wage dispersion and wage dynamics with stock-flow matching and on-the-job search. Under stock-flow matching, a searcher immediately becomes fully informed about the number of viable firms in the stock of job vacancies. If only one option is available, monopsony wages result. With more than one firm bidding, Bertrand wages arise. Over time turnover causes this historical impact to fade. Wage dispersion declines with tenure. The model also generates job-to-job transitions with both wage cuts and jumps.

Date: 2007
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Related works:
Working Paper: Wage dispersion and wage dynamics within and across firms (2009)
Working Paper: Wage Dispersion and Wage Dynamics Within and Across Firms (2009)
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