The Pricing of Job Characteristics When Markets Do Not Clear: Theory and Implications

35 Pages Posted: 19 Aug 2003 Last revised: 4 Nov 2010

See all articles by Kevin Lang

Kevin Lang

Boston University - Department of Economics; National Bureau of Economic Research (NBER)

Sumon Majumdar

Queen's University - Department of Economics

Date Written: August 2003

Abstract

This paper examines nonsequential search when jobs vary with respect to nonpecuniary characteristics. In the presence of frictions in the labor market, the equilibrium job distribution need not show evidence of compensating wage differentials. The model also generates several pervasive features of labor markets: unemployment and vacancies, apparent discrimination, and market segmentation. When workers are homogeneous, restrictions on the range of job offers decrease welfare and cannot reduce unemployment. However, when workers have heterogeneous preferences, such restrictions may lower unemployment and can even lead to a Pareto-improvement in welfare. We consider the impact of policies banning discrimination, regulating working-conditions and imposing a minimum wage.

Suggested Citation

Lang, Kevin and Majumdar, Sumon, The Pricing of Job Characteristics When Markets Do Not Clear: Theory and Implications (August 2003). NBER Working Paper No. w9911, Available at SSRN: https://ssrn.com/abstract=435501

Kevin Lang (Contact Author)

Boston University - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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Sumon Majumdar

Queen's University - Department of Economics ( email )

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Canada

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