Equilibrium Wage Dispersion and Interindustry Wage Differentials
Quarterly Journal of Economics
1991
This paper develops a search-theoretic explanation of interindustry wage differentials. Given coordination problems in the labor market, the probability of filling a vacancy is an increasing function of the wage offered; in equilibrium, firms that find vacancies more costly will offer higher wages. The model thus explains the persistence of interindustry wage differentials and their correlation with industry-average capital-labor ratio and profitability. Additionally, the model predicts that high-wage firms will receive more applications per job opening and that wages in the labor market will behave as strategic complements.
- DOI
- 10.2307/2937911
- Volume
- 106 (1)
- Pages
- 163-179
- Language
- en
- Export
- BibTeX
- Sources
- openalex crossref