Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/35831
Authors: 
Burdett, Ken
Carrillo-Tudela, Carlos
Coles, Melvyn G.
Year of Publication: 
2009
Series/Report no.: 
IZA discussion papers 4215
Abstract: 
We analyse an equilibrium labour market with on-the-job search and experience effects (where workers learn-by-doing). The analysis yields a standard Mincer wage equation with worker fixed effects and endogenously determined firm fixed effects. It shows that learning-by-doing increases equilibrium wage dispersion consistent with the data. Equilibrium sorting - where over time more experienced workers also tend to find and quit to better paid employment - has a significant impact on wage inequality. As the model yields a cross section distribution of wages paid with the 'right' structure (the density of wages paid is single peaked with a 'fat' Pareto right tail) and yields the 'right' time profile of worker wage outcomes (the initial 10 years of a worker's career are characterised by several job changes and rapid wage growth) it yields a new, coherent statistical structure for future applied work.
Subjects: 
Search
wage dispersion
human capital accumulation
JEL: 
J24
J42
J64
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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