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Title:Endogenous Wage and Capital Dispersion, On-the-Job Search and the Matching Technology PDF Logo
Authors:Galindo-Rueda, Fernando
Issue Date:2002
Series/Report no.:IZA Discussion paper series 625
Abstract:This paper presents a new model of endogenous wage and capital dispersion where heterogeneity is driven by entrepreneurial incentives to pay higher wages in order to attract and retain workers. The main contribution of this model is to provide a framework with microeconomic foundations that give rise to matching frictions, which can be used to understand the dynamic features of job-worker flows, wage dispersion and mobility as well as search on the job. The basic model is also extended to endogenise firms? optimal investment in job-specific capital and search efforts undertaken by both employed and unemployed individuals. The empirical implications of this model are compared to those of the apparently more tractable and indeed, more frequently used aggregate matching technology. Existing differences turn out to be crucial for the empirical identification of the wage offer distribution and may also bias subsequent inferences about underlying search cost parameters.
Subjects:matching technology
wage posting
on-the-job search
micro-foundations
endogenous wage and capital distributions
empirical identification
JEL:J39
J41
J64
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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