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Can the Mortensen-Pissarides Model with Productivity Changes Explain U.S. Wage Inequality?

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  • Linda Y. Wong

    (Binghamton University)

Abstract

This article examines whether the Mortensen-Pissarides matching model with productivity changes can explain the time pattern of wage inequality. The main finding is that the model produces counterfactual results. The main source of failure seems to be the exogenous matching function and/or the exogenous surplus share, neither of which allows firms to use wage policies to direct workers' searches.

Suggested Citation

  • Linda Y. Wong, 2003. "Can the Mortensen-Pissarides Model with Productivity Changes Explain U.S. Wage Inequality?," Journal of Labor Economics, University of Chicago Press, vol. 21(1), pages 70-105, January.
    • Handle: RePEc:ucp:jlabec:v:21:y:2003:i:1:p:70-105
    DOI: 10.1086/344124
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    References listed on IDEAS

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    9. David H. Autor & Lawrence F. Katz & Alan B. Krueger, 1998. "Computing Inequality: Have Computers Changed the Labor Market?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 113(4), pages 1169-1213.
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    Cited by:

    1. Summerfield, Fraser, 2014. "Labor Market Conditions, Skill Requirements and Education Mismatch," CLSSRN working papers clsrn_admin-2014-19, Vancouver School of Economics, revised 28 Apr 2014.
    2. Xavier Cuadras Morató & Xavier Mateos-Planas, 2006. "Wage inequality and unemployment with overeducation," Economics Working Papers 938, Department of Economics and Business, Universitat Pompeu Fabra.
    3. Fraser Summerfield & Ioannis Theodossiou, 2017. "The Effects Of Macroeconomic Conditions At Graduation On Overeducation," Economic Inquiry, Western Economic Association International, vol. 55(3), pages 1370-1387, July.
    4. Andrew Kerr, 2012. "A Model of Comparative Advantage with Matching in the Urban Tanzanian Labour Market," CSAE Working Paper Series 2012-21, Centre for the Study of African Economies, University of Oxford.
    5. Yip, Chi Man, 2010. "Can't SBTC explain the U.S. wage inequality dynamics?," MPRA Paper 31198, University Library of Munich, Germany.
    6. Capatina, Elena, 2014. "Skills and the evolution of wage inequality," Labour Economics, Elsevier, vol. 28(C), pages 41-57.
    7. Anders Frederiksen & Odile Poulsen, 2016. "Income Inequality: The Consequences Of Skill-Upgrading When Firms Have Hierarchical Organizational Structures," Economic Inquiry, Western Economic Association International, vol. 54(2), pages 1224-1239, April.
    8. Michael Sattinger, 2003. "Capital Intensity, Neutral Technological Change, and Earnings Inequality," Discussion Papers 03-05, University at Albany, SUNY, Department of Economics.
    9. Yashiv, Eran, 2007. "Labor search and matching in macroeconomics," European Economic Review, Elsevier, vol. 51(8), pages 1859-1895, November.
    10. Marcus Hagedorn & Iourii Manovskii & Sergiy Stetsenko, 2016. "Taxation and Unemployment in Models with Heterogeneous Workers," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 19, pages 161-189, January.
    11. Chul‐In Lee, 2010. "Can Search‐Matching Models Explain Migration And Wage And Unemployment Gaps In Developing Economies? A Calibration Approach," Journal of Regional Science, Wiley Blackwell, vol. 50(2), pages 635-654, May.
    12. Ingram, Beth F. & Neumann, George R., 2006. "The returns to skill," Labour Economics, Elsevier, vol. 13(1), pages 35-59, February.
    13. Andrea Mario Lavezzi, 2006. "On High‐Skill And Low‐Skill Equilibria: A Markov Chain Approach," Metroeconomica, Wiley Blackwell, vol. 57(2), pages 121-157, May.

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