Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/70603
Authors: 
Carrillo-Tudela, Carlos
Smith, Eric
Year of Publication: 
2009
Series/Report no.: 
Working Paper, Federal Reserve Bank of Atlanta 2009-22
Abstract: 
This paper examines wage dispersion and wage dynamics in a stock-flow matching economy with on-the-job search. Under stock-flow matching, job seekers immediately become fully informed about the stock of viable vacancies. If only one option is available, monopsony wages result. With more than one firm bidding, Bertrand wages arise. The initial and expected threat of competition determines the evolution of wages and thereby introduces a novel way of understanding wage differences among similar workers. The resulting wage distribution has an interior mode and prominent, well-behaved tails. The model also generates job-to-job transitions with both wage cuts and jumps.
Subjects: 
wage dispersion
wage dynamics
job search
stock-flow matching
JEL: 
J31
J63
J64
Document Type: 
Working Paper

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