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Equilibrium Wage Dispersion, Firm Size, and Growth

Coles, MG (2001) 'Equilibrium Wage Dispersion, Firm Size, and Growth.' Review of Economic Dynamics, 4 (1). 159 - 187. ISSN 1094-2025

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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. © 2001 Academic Press.

Item Type: Article
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculty of Social Sciences > Economics, Department of
Depositing User: Jim Jamieson
Date Deposited: 04 Jan 2013 12:36
Last Modified: 05 Feb 2019 20:15
URI: http://repository.essex.ac.uk/id/eprint/4878

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