Journal of Labor Economics Vol. 16 No. 4 1998

Hedonic Wages and Labor Market Search

Hae-Shin Hwang^1,2; Dale T. Mortensen³; W. Robert Reed⁴

¹ Mitchell Institute · ² Texas A&M University · ³ Northwestern University · ⁴ University of Oklahoma

Abstract

This article investigates the consequences of labor market search for the theory of hedonic wages. We find that the introduction of search has surprising consequences for the theory of hedonic wages. In particular, we demonstrate that the equilibrium distribution of wage and nonwage amenity bundles generally bears little resemblance to workers' underlying preferences. A consequence of this analysis is that estimates of workers' marginal willingness to pay, derived from the conventional hedonic wage methodology, are biased. In addition, we demonstrate that search generates differences between firm‐level and employee‐level data that can cause substantial deviations in the estimates of hedonic wage equations.

DOI

10.1086/209907

Volume

16

Issue

4

Pages

815-847

Language

en

Sources

openalex crossref

Cite

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