Unemployment History and Frictional Wage Dispersion

Victor Ortego-Marti

No 201402, Working Papers from University of California at Riverside, Department of Economics

Abstract: This paper studies wage dispersion among identical workers in a random matching search model in which workers lose human capital during unemployment. Wage dispersion increases, as workers accept lower wages to avoid long unemployment spells. The model is an important improvement over baseline search models. It explains between a third and half of the observed residual wage dispersion. When adding on-the-job search, the model accounts for all of the residual wage dispersion and generates substantial dispersion even for high values of non-market time. The paper thus addresses the trade-off between explaining frictional wage dispersion and the cyclical behavior of unemployment.

Keywords: Job search; search and matching; wage dispersion; unemployment history (search for similar items in EconPapers)
JEL-codes: E2 (search for similar items in EconPapers)
Date: 2014-09
New Economics Papers: this item is included in nep-dge, nep-ger, nep-lab and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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https://economics.ucr.edu/repec/ucr/wpaper/201402.pdf First version, 2014 (application/pdf)

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Journal Article: Unemployment history and frictional wage dispersion (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:ucr:wpaper:201402

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