Title: Equilibrium Wage Dispersion and Interindustry Wage Differentials
Abstract:This paper develops a search-theoretic explanation of interindustry wage differentials. Given coordination problems in the labor market, the probability of filling a vacancy is an increasing function ...This paper develops a search-theoretic explanation of interindustry wage differentials. Given coordination problems in the labor market, the probability of filling a vacancy is an increasing function of the wage offered; in equilibrium, firms that find vacancies more costly will offer higher wages. The model thus explains the persistence of interindustry wage differentials and their correlation with industry-average capital-labor ratio and profitability. Additionally, the model predicts that high-wage firms will receive more applications per job opening and that wages in the labor market will behave as strategic complements.Read More
Publication Year: 1991
Publication Date: 1991-02-01
Language: en
Type: article
Indexed In: ['crossref']
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Cited By Count: 392
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