The Value of Leisure or Disutility of Work: Wage Dispersion in a Model of Search with Endogenous Effort
33 Pages Posted: 26 Apr 2012
Date Written: January 3, 2012
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.
Keywords: Wage dispersion, search
JEL Classification: E24, J64
Suggested Citation: Suggested Citation