The effect of Search Frictions on Wages
Labor market theories allowing for search frictions make marked predic-tions on the eect of the degree of frictions on wages. Often, the eect ispredicted to be negative. Despite the popularity of these theories, this hasnever been tested. We perform tests with matched worker-rm data. Theworker data are informative on individual wages and labor market transi-tions, and this allows for estimation of the degree of search frictions. Therm data are informative on labor productivity. The matched data pro-vide the skill composition in dierent markets. Together this allows us toinvestigate how the mean dierence between labor productivity and wagesin a market depends on the degree of frictions and other determinants. Wecorrect for worker self-selection into high-wage jobs. Using within-marketvariation, we also investigate the extent of (and explanations for) positiveassortative matching.
Year of publication: |
2003
|
---|---|
Authors: | Van den Berg, Gérard J, ; Van Vuuren, Aico |
Institutions: | Centre de Recherche en Économie et Statistique (CREST), Groupe des Écoles Nationales d'Économie et Statistique (GENES) |
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