On the Pure Theory of Wage Dispersion
Speaker: Cheng Wang, Iowa State University & Fudan University
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Topic: |
On the Pure Theory of Wage Dispersion |
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Time & Date: |
10:30am-12:00pm, 2017/12/1 |
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Venue: |
Room 502, Daoyuan Building, CUHK(SZ) |
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Speaker: |
Cheng Wang, Iowa State University & Fudan University |
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Detail: |
We develop a pure theory of wage dispersion an equilibrium model of search and on-
the-job search where identical firms offer differential wages/contracts to homogeneous workers. Jobs are optimal dynamic contracts that allow firms to match the worker's outside offers or let the job be terminated. Such a model generates distributions of wage offers that are non-degenerate and unimodal. It can be calibrated to the U.S. labor market to produce a wage offer dispersion that resembles observations, together with a distribution in the wages earned that is consistent with data, in both magnitude and shape. Counteroffers are a key variable in the theory. Too much counteroffering destroys the dispersion in wages offered, but too little of it renders the theory not being able to explain the observed distribution of wages earned. |
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