Compensating Wage Differentials in Stable Job Matching Equilibrium

Microeconomics.ca working papers from Vancouver School of Economics

Abstract: This paper studies implicit pricing of non-wage job characteristics in the labour market using a two-sided matching model. It departs from the previous literature by allowing worker heterogeneity in productivity, which gives rise to a double transaction problem in a hedonic model. Deriving sufficient conditions under which assortative matching is the unique stable job-worker matching, we show that observed wage differentials between jobs reflect not only compensating wage differentials, but also worker productivity gaps between the jobs. We find that the job-worker matching pattern determines the extent to which compensating wage differentials are confounded with the worker productivity gap effect.

Keywords: hedonic model; heterogeneity; two-sided matching; matching pattern; wage differential; equalizing difference; worker productivity (search for similar items in EconPapers)
JEL-codes: C78 J31 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2012-01-30, Revised 2013-02-27
New Economics Papers: this item is included in nep-gth, nep-lab and nep-lma
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Related works:
Journal Article: Compensating wage differentials in stable job matching equilibrium (2015)
Working Paper: Compensating Wage Differentials in Stable Job Matching Equilibrium (2013)
Working Paper: Compensating Wage Differentials in Stable Job Matching Equilibrium (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:ubc:pmicro:seungjin_han-2012-4

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