Equilibrium Wage Dispersion, Firm Size, and Growth

M. G. Coles

doi:10.1006/redy.2000.0106

Equilibrium Wage Dispersion, Firm Size, and Growth

M. G. Coles

Economics

Research output: Contribution to journal › Article › peer-review

Abstract

This paper analyzes a model of equilibrium wage dynamics and wage dispersion across firms. It considers a labor market where firms set wages and workers use on-the-job search to look for better paid work. It analyzes a perfect equilibrium where each firm can change its wage paid at any time, and workers use optimal quit strategies. Firms trade off higher wages against a lower quit rate, and large firms (those with more employees) always pay higher wages than small firms. Non-steady-state dispersed price equilibria are also analyzed, which describe how wages vary as each firm and the industry as a whole grow over time. Journal of Economic Literature Classification Numbers: D43, J41.

Original language	English (US)
Pages (from-to)	159-187
Number of pages	29
Journal	Review of Economic Dynamics
Volume	4
Issue number	1
DOIs	https://doi.org/10.1006/redy.2000.0106
State	Published - Jan 2001

Keywords

On-the-job search; wage dispersion; perfect equilibrium

ASJC Scopus subject areas

Economics and Econometrics

Access to Document

10.1006/redy.2000.0106

Cite this

@article{c416982fb6db4e518ba035b1200290a1,

title = "Equilibrium Wage Dispersion, Firm Size, and Growth",

abstract = "This paper analyzes a model of equilibrium wage dynamics and wage dispersion across firms. It considers a labor market where firms set wages and workers use on-the-job search to look for better paid work. It analyzes a perfect equilibrium where each firm can change its wage paid at any time, and workers use optimal quit strategies. Firms trade off higher wages against a lower quit rate, and large firms (those with more employees) always pay higher wages than small firms. Non-steady-state dispersed price equilibria are also analyzed, which describe how wages vary as each firm and the industry as a whole grow over time. Journal of Economic Literature Classification Numbers: D43, J41.",

keywords = "On-the-job search; wage dispersion; perfect equilibrium",

author = "Coles, {M. G.}",

note = "Funding Information: 1The author is grateful for financial support from La Comision Interministerial de Ciencia y Tecnologia and the Leverhulme Trust. E-mail: mcole@essex.ac.uk.",

year = "2001",

month = jan,

doi = "10.1006/redy.2000.0106",

language = "English (US)",

volume = "4",

pages = "159--187",

journal = "Review of Economic Dynamics",

issn = "1094-2025",

publisher = "Academic Press Inc.",

number = "1",

}

TY - JOUR

T1 - Equilibrium Wage Dispersion, Firm Size, and Growth

AU - Coles, M. G.

N1 - Funding Information: 1The author is grateful for financial support from La Comision Interministerial de Ciencia y Tecnologia and the Leverhulme Trust. E-mail: mcole@essex.ac.uk.

PY - 2001/1

Y1 - 2001/1

N2 - This paper analyzes a model of equilibrium wage dynamics and wage dispersion across firms. It considers a labor market where firms set wages and workers use on-the-job search to look for better paid work. It analyzes a perfect equilibrium where each firm can change its wage paid at any time, and workers use optimal quit strategies. Firms trade off higher wages against a lower quit rate, and large firms (those with more employees) always pay higher wages than small firms. Non-steady-state dispersed price equilibria are also analyzed, which describe how wages vary as each firm and the industry as a whole grow over time. Journal of Economic Literature Classification Numbers: D43, J41.

AB - This paper analyzes a model of equilibrium wage dynamics and wage dispersion across firms. It considers a labor market where firms set wages and workers use on-the-job search to look for better paid work. It analyzes a perfect equilibrium where each firm can change its wage paid at any time, and workers use optimal quit strategies. Firms trade off higher wages against a lower quit rate, and large firms (those with more employees) always pay higher wages than small firms. Non-steady-state dispersed price equilibria are also analyzed, which describe how wages vary as each firm and the industry as a whole grow over time. Journal of Economic Literature Classification Numbers: D43, J41.

KW - On-the-job search; wage dispersion; perfect equilibrium

UR - http://www.scopus.com/inward/record.url?scp=0042907295&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=0042907295&partnerID=8YFLogxK

U2 - 10.1006/redy.2000.0106

DO - 10.1006/redy.2000.0106

M3 - Article

AN - SCOPUS:0042907295

VL - 4

SP - 159

EP - 187

JO - Review of Economic Dynamics

JF - Review of Economic Dynamics

SN - 1094-2025

IS - 1

ER -

Equilibrium Wage Dispersion, Firm Size, and Growth

Abstract

Keywords

ASJC Scopus subject areas

Access to Document

Other files and links

Fingerprint

Cite this