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The value of leisure or disutility of work: Wage dispersion in a model of search with endogenous effort

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  • Adrian Masters

Abstract

Wage dispersion is generated in a sequential search environment through heterogeneity in firm productivity along with an individual wage-effort trade-off. For a given degree of TFP dispersion, the framework can generate any amount of wage dispersion. Calibrated to generate realistic gains from trade, it is able to generate the kind of wage dispersion observed in data.

Suggested Citation

  • Adrian Masters, 2012. "The value of leisure or disutility of work: Wage dispersion in a model of search with endogenous effort," Discussion Papers 12-07, University at Albany, SUNY, Department of Economics.
    • Handle: RePEc:nya:albaec:12-07
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    References listed on IDEAS

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    1. Marcus Hagedorn & Iourii Manovskii, 2008. "The Cyclical Behavior of Equilibrium Unemployment and Vacancies Revisited," American Economic Review, American Economic Association, vol. 98(4), pages 1692-1706, September.
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