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Heterogeneous Matching with Transferable Utility: Two Labor Market Applications

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  • Alain Delacroix

    (Purdue University)

Abstract

A labor market model under search frictions is developed, where participants are heterogeneous in productivity and the decision of which type of agents to match with is endogenized. Two applications are studied. It is observed that countries with high (low) unemployment tend to exhibit low (high) wage dispersion. And there is evidence showing that individual and firm characteristics have more explanatory power for the French than for the American wage data. Matching patterns can account for these two observations. In the absence of a minimum wage, I thus provide a theory of endogenous wage compression. Copyright 2003 By The Economics Department Of The University Of Pennsylvania And Osaka University Institute Of Social And Economic Research Association

Suggested Citation

  • Alain Delacroix, 2003. "Heterogeneous Matching with Transferable Utility: Two Labor Market Applications," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(1), pages 313-330, February.
    • Handle: RePEc:ier:iecrev:v:44:y:2003:i:1:p:313-330
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    Cited by:

    1. Uren Lawrence, 2008. "Inequality, Volatility and Labour Market Efficiency," The B.E. Journal of Macroeconomics, De Gruyter, vol. 8(1), pages 1-30, May.
    2. Philipp Ehrl, 2014. "High-wage workers and high-productivity firms - a regional view on matching in Germany," Working Papers 149, Bavarian Graduate Program in Economics (BGPE).
    3. Arnold Polanski & Emiliya Lazarova, 2015. "Dynamic multilateral markets," International Journal of Game Theory, Springer;Game Theory Society, vol. 44(4), pages 815-833, November.
    4. Andersson, Fredrik & Burgess, Simon & Lane, Julia I., 2007. "Cities, matching and the productivity gains of agglomeration," Journal of Urban Economics, Elsevier, vol. 61(1), pages 112-128, January.
    5. repec:hal:spmain:info:hdl:2441/9938 is not listed on IDEAS
    6. King, Ian & Kennes, John & Julien, Benoit, 2001. "Residual Wage Disparity in Directed Search Equilibrium," Working Papers 209, Department of Economics, The University of Auckland.
    7. Mikko Moilanen, 2010. "Matching and settlement patterns: The case of Norway," Papers in Regional Science, Wiley Blackwell, vol. 89(3), pages 607-623, August.
    8. repec:spo:wpmain:info:hdl:2441/9938 is not listed on IDEAS

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