Job search with ubiquity and the wage distribution

Decreuse, Bruno and Zylberberg, André (2006): Job search with ubiquity and the wage distribution.

Abstract

We propose a search equilibrium model in which homogenous firms post wages along with a vacancy to attract job-seekers, while homogenous unemployed workers invest in costly search. The key innovation relies on the organization of the search market and the search behavior of the job-seekers. The search market is segmented by wage level, and individuals are ubiquitous in the sense they can choose the amount of search effort spent on each (sub-)market. We show that there exists a non-degenerate equilibrium wage distribution. Remarkably, the density of this wage distribution is hump-shaped, and it can be right-tailed. Our results are illustrated by an example originating a Beta wage distribution.

• Item Type: MPRA Paper
• Institution: GREQAM
• Language: English
• Keywords: Search effort; Segmented markets; Equilibrium wage dispersion
• Subjects: J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J31 - Wage Level and Structure ; Wage Differentials; J - Labor and Demographic Economics > J6 - Mobility, Unemployment, Vacancies, and Immigrant Workers > J64 - Unemployment: Models, Duration, Incidence, and Job Search; J - Labor and Demographic Economics > J4 - Particular Labor Markets > J41 - Labor Contracts; D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D83 - Search ; Learning ; Information and Knowledge ; Communication ; Belief ; Unawareness

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