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Equilibrium Wage Dispersion: An Example
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Damien Gaumont
Published/Copyright:
October 3, 2006
Search models with wage posting and match-specific heterogeneity generate wage dispersion. Given K values for the match-specific variable, it is known that there are K reservation wages that could be posted, but generically never more than two actually are posted in equilibrium. What is unknown is when we get two wages, and which of the reservation wages are actually posted. For an example with K = 3, we show equilibrium is unique, may have one wage or two, and when there are two, the equilibrium can display any combination of posted reservation wages, depending on parameters. We also show how wages, profits and unemployment depend on productivity.
Published Online: 2006-10-3
©2011 Walter de Gruyter GmbH & Co. KG, Berlin/Boston
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- Counter-Cyclical and Counter-Inflation Monetary Policy Rules and Comovement Properties of Money Growth
- Hicks Neutral Technical Change Revisited: CES Production Function and Information of General Order
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- A Refinement in the Specification of Empirical Macroeconomic Models as an Extension to the EBA Procedure
- Education, Growth, and Redistribution in the Presence of Capital Flight
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