Wage Dispersion and Search Behavior: The Importance of Non-Wage Job Values

89 Pages Posted: 30 Nov 2015 Last revised: 5 Dec 2015

See all articles by Robert E. Hall

Robert E. Hall

Hoover Institution and Department of Economics, Stanford University; National Bureau of Economic Research (NBER)

Andreas I. Mueller

University of Texas at Austin - Department of Economics; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics; Centre for Economic Policy Research (CEPR)

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Date Written: November 2015

Abstract

We use a rich new body of data on the experiences of unemployed jobseekers to determine the sources of wage dispersion and to create a search model consistent with the acceptance decisions the jobseekers made. Heterogeneity in non-wage job values or amenities among jobseekers and jobs is a central feature of our model. From the data and the model, we identify the distributions of four key variables: offered wages, offered non-wage job values, the value of the jobseeker's non-work alternative, and the jobseeker's personal productivity. We find that, conditional on personal productivity, the standard deviation of offered log-wages is moderate, at 0.24, whereas the dispersion of the non-wage component of offered job values is substantially larger, at 0.34. The resulting dispersion of offered job values is 0.38. We also find high dispersion of personal productivity, at 0.43.

Suggested Citation

Hall, Robert E. and Mueller, Andreas I., Wage Dispersion and Search Behavior: The Importance of Non-Wage Job Values (November 2015). NBER Working Paper No. w21764, Available at SSRN: https://ssrn.com/abstract=2696850

Robert E. Hall (Contact Author)

Hoover Institution and Department of Economics, Stanford University ( email )

Stanford, CA 94305-6010
United States
650-723-2215 (Phone)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States
650-723-2215 (Phone)

Andreas I. Mueller

University of Texas at Austin - Department of Economics ( email )

Austin, TX 78712
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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