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Wage Dispersion : Why Are Similar Workers Paid Differently? - Dale T. Mortensen

Wage Dispersion

Why Are Similar Workers Paid Differently?

Paperback Published: 14th January 2005
ISBN: 9780262633192
Number Of Pages: 160
For Ages: 18+ years old

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Why are workers with identical skills found in both "good" jobs and "bad" jobs? Why are workers who do similar jobs paid differently, contrary to standard competitive theory? Observable differences in workers doing the same job account for only 30 percent of wage variation. In "Wage Dispersion," Dale Mortensen examines the reasons for pay differentials in the other 70 percent. He finds that these differentials, or wage dispersion, are largely the result of job search friction (which arises when workers do not know the wages offered by all employers) and cross-firm differences in wage policy and productivity. Mortensen examines previous theoretical explanations for wage dispersion, testing them against data from a Danish matched employer-employee database. He begins by offering a simple one-period model of the problem, then expands this basic model intertemporally to include the role of on-the-job worker search behavior. Following this, he discusses theoretical modifications that offer an explanation for the nature of observed wage dispersion, particularly the shape of cross-firm wage distribution. He then examines the hypothesis that wage policies are determined by profit-maximizing behavior and finds that the Danish data do not support it; he argues that bilateral wage bargaining is the more likely determinant. Finally, he reviews recent work that extends the basic theoretical framework to explain wage dispersion within firms.

Industry Reviews

"Mortensen both develops cutting-edge theories of job search and tests them with empirical evidence from an incredible new data set. The integration of theory and data makes this book a must-read for anyone interested in labor economics." - Robert Shimer, Department of Economics, University of Chicago"

Series Forewordp. ix
Forewordp. xi
Prefacep. xiii
Introductionp. 1
Evidence in Search of Theoryp. 9
The Burdett-Mortensen Modelp. 35
The Shape of Wage Dispersionp. 47
Wage Dispersion and Worker Flowsp. 71
The Wage-Tenure Relationp. 97
Appendix: An Existence Proofp. 125
Afterwordp. 129
Bibliographyp. 133
Indexp. 139
Table of Contents provided by Publisher. All Rights Reserved.

ISBN: 9780262633192
ISBN-10: 0262633191
Series: Zeuthen Lecture Book
Audience: Professional
For Ages: 18+ years old
Format: Paperback
Language: English
Number Of Pages: 160
Published: 14th January 2005
Publisher: AMITY PUB CO
Country of Publication: US
Dimensions (cm): 21.59 x 13.97  x 1.27
Weight (kg): 0.25