A firm monopsonistically hires labor from a pool containing both skilled and unskilled workers. The marginal value of a worker depends on the match between the job and the worker's skill level. Unskilled workers can have negative productivity if they are placed in a skilled job. The firm cannot...

Rising wage inequality in the U.S. and Britain (especially in the 1980s) and rising continental European unemployment (with rather stable wage inequality) have led to a popular view in the economics profession that these two phenomena are related to negative relative demand shocks against the...

Diese Arbeit untersucht empirisch den Zusammenhang von Beschäftigung und Lohnstrukturen zwischen sowie innerhalb von Qualifikations- und Altersgruppen. Zunächst werden Substitutionselastizitäten zwischen Qualifikations- und Altersgruppen geschätzt und die Lohnveränderungen bestimmt, die...

It is commonplace in the debate on Germany?s labor market problems to argue that high unemployment and low wage dispersion are related. This paper analyses the relationship between unemployment and residual wage dispersion for individuals with comparable attributes. In the conventional...

Equilibrium search theory suggests that the wage distribution in a cross section of workers is closely related to labor market transitions and associated wage changes. Accordingly, job?to?job transitions are central in explaining the wage distribution. This paper uses the IAB employment...

This paper addresses the large degree of frictional wage dispersion in US data. The standard job matching model without on-the-job search cannot replicate this pattern. With on-the-job search, however, unemployed job searchers are more will- ing to accept low wage offers since they can continue...

We analyze a general search model with on-the-job search and sorting of heterogeneous workers into heterogeneous jobs. This model yields a simple relationshipbetween (i) the unemployment rate, (ii) the value of non-market time, and (iii) themax-mean wage differential. The latter measure of wage...

Do firms reduce employment when their insiders (established, incumbent employees) claim higher wages? The conventional answer in the theoretical literature is that insider power has no influence on employment, provided that the newly hired employees (entrants) receive their reservation wages....

Facing the recent German debate on the minimum wage, this paper analyses theoretical effects of minimum wages on employment and wage distribution under a frictional setting. I??review new developments in search theory and discuss the influence of the minimum wage on wages and employment under...

Rising wage inequality in the U.S. and Britain (especially in the 1980s) and rising continental European unemployment (with rather stable wage inequality) have led to a popular view in the economics profession that these two phenomena are related to negative relative demand shocks against the...