MARC Record from Library of Congress

LEADER: 02524cam a22003257a 4500
001 2006615831
003 DLC
005 20070818082026.0
007 cr |||||||||||
008 061002s2006 vau sb f000 0 eng
010 $a 2006615831
040 $aDLC$cDLC$dDLC
043 $an-us---
050 00 $aHB1
100 1 $aHornstein, Andreas.
245 10 $aFrictional wage dispersion in search models$h[electronic resource] :$ba quantitative assessment /$cby Andreas Hornstein, Per Krusell & Giovanni L. Violante.
260 $a[Richmond, Va.] :$bFederal Reserve Bank of Richmond,$c[2006]
490 1 $aWorking paper ;$vno. 06-7
538 $aSystem requirements: Adobe Acrobat Reader.
538 $aMode of access: World Wide Web.
500 $aTitle from PDF file as viewed on Oct. 1, 2006.
530 $aAlso available in print.
504 $aIncludes bibliographical references.
520 3 $a"Standard search and matching models of equilibrium unemployment, once prop- erly calibrated, can generate only a small amount of frictional wage dispersion, i.e., wage di erentials among ex-ante similar workers induced purely by search frictions. We derive this result for a speci c measure of wage dispersion the ratio between the average wage and the lowest (reservation) wage paid. We show that in a large class of search and matching models this statistic ("the mean-min ratio") can be obtained in closed form as a function of observable variables (i.e., interest rate, value of leisure, and statistics of labor market turnover). Looking at various independent data sources suggests that, empirically, residual wage dispersion (i.e., inequality among observationally similar workers) exceeds the model's prediction by a factor of 20. We discuss three extensions of the model (risk aversion, volatile wages during employment, and on-the-job search) and nd that, in their simplest version, they can improve its performance, but only modestly. We conclude that either frictions account for a tiny fraction of residual wage dispersion, or the standard model needs to be augmented to confront the data."--Federal Reserve Bank of Richmond web site.
653 $alabor market;$awage inequality;$asearch frictions;$ajob search
700 1 $aKrusell, Per.
700 1 $aViolante, Giovanni L.
710 2 $aFederal Reserve Bank of Richmond.
830 0 $aWorking paper (Federal Reserve Bank of Richmond : Online) ;$vno. 06-7.
856 40 $uhttp://www.richmondfed.org/publications/economic_research/working_papers/years.cfm/2006/