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Job search skills, employer size and wages

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  • Daniel Millimet

Abstract

Many theories concerning the underlying cause of the observed positive correlation between employer size and wages have been evaluated empirically, with a sizeable residual remaining unexplained. This study presents and tests a new theory: successful applicants for vacancies in larger employers possess greater job search skills and therefore are able to obtain a wage closer to their maximum potential wage. Empirical results confirm that differential job search abilities can account for approximately 20% of the difference in average observed wages across large and small employers.

Suggested Citation

  • Daniel Millimet, 2005. "Job search skills, employer size and wages," Applied Economics Letters, Taylor & Francis Journals, vol. 12(2), pages 95-100.
    • Handle: RePEc:taf:apeclt:v:12:y:2005:i:2:p:95-100
    DOI: 10.1080/1350485042000314316
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    References listed on IDEAS

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    1. Oi, Walter Y. & Idson, Todd L., 1999. "Firm size and wages," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 33, pages 2165-2214, Elsevier.
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    Cited by:

    1. Steven B. Caudill & Charles O. Kroncke & Franklin G. Mixon, 2021. "Is there a firm size‐wage gap after economic transition? – An examination of for‐profit and not‐for‐profit firms in Estonia," LABOUR, CEIS, vol. 35(4), pages 435-449, December.
    2. Kristina Nyström & Gulzat Elvung, 2014. "New firms and labor market entrants: Is there a wage penalty for employment in new firms?," Small Business Economics, Springer, vol. 43(2), pages 399-410, August.
    3. Solomon W. Polachek, 2017. "Heterogeneity in the Labor Market: Ability and Information Acquisition," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 43(3), pages 377-390, June.
    4. Kristina Nyström, 2021. "Working for an entrepreneur: heaven or hell?," Small Business Economics, Springer, vol. 56(2), pages 919-931, February.

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