model developed by Klette and Kortum (2004) and an equilibrium search model of the labor market with job to job flows introduced by Mortensen (2003). In the construction, a continuum of intermediate product and service varieties are produced with labor that serve as inputs in the production of a...

In the context of the canonical search and matching model with many worker firms, it is known that a unique single wage steady state equilibrium exists even when employer factor productivity differs. Contrary to this result, matched employer-employee data suggest both wage and productivity...