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Wage Dispersion, Over-Qualification, and Reder Competition

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  • Schlicht, Ekkehart

Abstract

The expansion of higher education in the Western countries has been accompanied by a marked widening of wage differentials and increasing over-qualification. While the increase in wage differentials has been attributed to skill-biased technological change that made advanced skills scarce, this explanation does not fit well with the observed increase in over-qualification which suggests that advanced skills are in excess supply. By "Reder-competition" I refer to the simultaneous adjustment of wage offers and hiring standards in response to changing labor market conditions. I present a simple model of Reder competition that depicts wages as driven by labor heterogeneity, rather than scarcity. The mechanism may give rise to a simultaneous increase in wage differentials and over-qualification.

Suggested Citation

  • Schlicht, Ekkehart, 2008. "Wage Dispersion, Over-Qualification, and Reder Competition," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 1, pages 1-22.
    • Handle: RePEc:zbw:ifweej:200713r
    DOI: 10.5018/economics-ejournal.ja.2007-13
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Krugman und der Mindestlohn
      by Ekkehart Schlicht in Funktionale Staatsfinanzen on 2013-02-18 22:42:00
    2. Überqualifikation
      by Ekkehart Schlicht in Funktionale Staatsfinanzen on 2018-03-11 08:17:00
    3. Die Wirkunng der Besteuerung von Spitzeneinkommen und die Selektionstheorie der Lohnbildung
      by Ekkehart Schlicht in Funktionale Staatsfinanzen on 2022-12-15 16:56:00
    4. Die Reservearmee der Überqualifizierten
      by Ekkehart Schlicht in Funktionale Staatsfinanzen on 2015-10-18 15:25:00

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    Cited by:

    1. Johannes Ludsteck, 2014. "Exploiting Regional Heterogeneity to Test Wage Setting Theories - Firm Size Wage Effects in Urban and Rural Regions," ERSA conference papers ersa14p374, European Regional Science Association.
    2. Ayako Saiki & Jon Frost, 2014. "How does unconventional monetary policy affect inequality? Evidence from Japan," DNB Working Papers 423, Netherlands Central Bank, Research Department.
    3. Ayako Saiki & Jon Frost, 2014. "Does unconventional monetary policy affect inequality? Evidence from Japan," Applied Economics, Taylor & Francis Journals, vol. 46(36), pages 4445-4454, December.

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    More about this item

    Keywords

    Hiring standards; employment criteria; selection wages; efficiency wages; mobility; skillbiased technological change; heterogeneity-biased technological change; over-qualification; over-education; wage dispersion; Reder competition;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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