Labor Market (labor + market)

Distribution by Scientific Domains
Distribution within Humanities and Social Sciences

Kinds of Labor Market

  • local labor market
  • regional labor market

  • Terms modified by Labor Market

  • labor market characteristic
  • labor market dynamics
  • labor market effects
  • labor market experience
  • labor market outcome
  • labor market policy

  • Selected Abstracts


    MULTIDIMENSIONAL SIGNALING IN THE LABOR MARKET

    THE MANCHESTER SCHOOL, Issue 2007
    JEONG-YOO KIM
    I consider a two-dimensional job market signaling model in which firms care about a worker's personal network as well as his technical productivity, and a worker can choose both academic activity and social activity to signal his ability. In a simple model where the social activity forming a social network does not require special ability, I show that the Cho,Kreps intuitive criterion singles out Spence's outcome of signaling high academic ability by high education. I also demonstrate the possibility that a worker with high academic ability may underinvest in education when the social ability is correlated with the academic ability. [source]


    INTERACTIONS BETWEEN WELFARE CASELOADS AND LOCAL LABOR MARKETS

    CONTEMPORARY ECONOMIC POLICY, Issue 4 2008
    BRIAN C. HILL
    This paper provides an empirical examination of interactions between welfare caseloads and local labor markets using data on caseload stocks, entries, and exits. Granger-causality tests show that unemployment rates Granger-cause caseload activity but caseload activity does not Granger-cause unemployment rates. The results also reveal differential dynamics between caseloads and labor market conditions for rural versus metropolitan markets. Several models of one-way association between caseload activity and unemployment rates are presented. The results show that higher unemployment rates are positively associated with welfare caseloads and entries and negatively related to exits. (JEL I38, R23) [source]


    INDUSTRIAL SHIFT, POLARIZED LABOR MARKETS AND URBAN VIOLENCE: MODELING THE DYNAMICS BETWEEN THE ECONOMIC TRANSFORMATION AND DISAGGREGATED HOMICIDE,

    CRIMINOLOGY, Issue 3 2004
    KAREN F. PARKER
    Industrial restructuring marks the removal of a manufacturing and production-based economy in urban areas, which had served as a catalyst in concentrating disadvantage and polarizing labor markets since the 1970s. Although scholars have established a relationship between concentrated disadvantage , poverty, joblessness, racial residential segregation , and urban violence in cross-sectional studies, this literature has yet to estimate whether economic restructuring contributed to the change in urban homicide over time. Modeling this relationship requires an analytical strategy that incorporates specific indicators of (race and gender) polarized labor markets, separate from indicators of urban disadvantage, on disaggregated homicides while taking into account the growing dependency of urban cities on formal social control (via police presence and rise in incarceration). In this study I provide a theoretical rationale for linking industrial restructuring to urban homicide. Using a multivariate strategy to capture the shift in labor market forces and disaggregated homicides from 1980 to 1990, I also estimate the impact of this relationship. The results provide evidence of the industrial ship and documents both the decline in Manufacturing jobs for black males and black females and a growth in the service sector opportunities for white males only. I also find that industrial restructuring had a unique impact on disaggregated homicide beyond what has previously been established in cross-sectional studies. [source]


    Changes in the Labor Market and Occupational Prestige Scores

    INTERNATIONAL JOURNAL OF JAPANESE SOCIOLOGY, Issue 1 2000
    Junsuke Hara
    Abstract, In spite of the great changes in the structures of industry as well as work and occupation in postwar Japan as a result of rapid industrialization, occupational prestige scores as an index of people's evaluation of occupations did not reveal the corresponding changes. They maintained consistent stability since the mid 1950s aside from parallel upward movements, which might be a result of the permeation of an egalitarian ideology. Three kinds of occupational prestige scores calculated from data in the SSM survey of 1955, 1975 and 1995 had very high correlation with each other. The scores also showed a strong correlation between levels of education and income for each occupation, and no relation with labor market situation. And the unchanged order of occupations in Japan might be one of the reasons for the stability. The fact that people's evaluation of occupations revealed by prestige scores has scarcely changed and such scores has been associated with differences in the level of education makes us suspect that Japan's "credentialism" might be weakened in the near future. [source]


    The Second Generation in Germany: Between School and Labor Market,

    INTERNATIONAL MIGRATION REVIEW, Issue 4 2003
    Susanne Worbs
    The German "mode of integration" after World War II has been to include migrants and their offspring into general societal institutions. This can be stated despite differences between federal states in some aspects of migrant integration (e.g., the educational sector). Migrant children normally attend the same schools and classes as their German age peers, they participate in the dual system of vocational training, and there are only a few limitations in labor market access. The second generation in Germany consists mainly of children of the "guestworkers" recruited in southern and southeastern European countries from the 1950s onwards. It is not easy to obtain information about their numbers and their socioeconomic position, as most statistical data distinguish only between foreigners and Germans. The achieved integration status of the second generation varies between areas: obvious problems in the educational system go along with considerable progress in the vocational training system and in the labor market. Children of Turkish migrants are the most disadvantaged group among the second generation. [source]


    Evolution of the Labor Market in a Regional City: The Changing Economic Performance of Emigrants from Mexico City,

    JOURNAL OF REGIONAL SCIENCE, Issue 3 2005
    Ricardo Sabates
    Using labor-income trajectories of emigrants from Mexico City, the paper analyzes how the labor market in a regional city, Leon, evolves. Results from the econometric model suggest that migrants' labor-income trajectories differ between the large agglomeration and the regional city in an early stage of the evolution of the labor market, but converge in a later stage. Specifically, the slope of the earning function for recent migrants is steeper and statistically different from the slope for early migrants. The findings presented in this paper enrich the existing theory by providing microfoundations to a typically macroeconomic area of research and enable policy makers to better understand the processes underpinning the evolution of regional labor markets. [source]


    Black Employment, Segregation, and the Social Organization of Metropolitan Labor Markets

    ECONOMIC GEOGRAPHY, Issue 3 2007
    Niki T. Dickerson
    Abstract: This broad analysis of the employment of blacks in metropolitan areas examines the role of residential segregation in comparison with four other key structural explanations for racial metropolitan inequality: industrial composition, minority concentration, immigration, and the racial disparity in skills. The goal of the analysis was to determine whether the spatial configuration of blacks relative to whites in a metropolitan area influences the employment rates of black men and black women in the context of the structural conditions of the local labor market. The study expanded the analysis of space and work beyond an emphasis on the physical distance between black communities and jobs to a broader conceptualization of residential segregation as a structural feature of the entire metropolitan labor market that is representative of its social organization with regard to race. Using a longitudinal data set of the structural characteristics of the 95 largest U.S. cities from the 1980, 1990, and 2000 decennial censuses, the study used a cross-sectional analysis of the cities in 2000 and a fixed-effects analysis to assess the impact of five dimensions of residential segregation and the four other structural factors on the employment of blacks across different labor markets and across time within each labor market. The results revealed that when the other structural characteristics are controlled, the employment rates of blacks are lower in more segregated cities and decrease as cities become more segregated over time. The clustering and evenness dimensions of residential segregation were the most determinative of black employment. [source]


    Unemployment Duration in Non-Metropolitan Labor Markets

    GROWTH AND CHANGE, Issue 2 2001
    Bradford F. Mills
    Non-metropolitan areas of the U.S have experienced significant structural economic changes in recent decades. These changes have raised concerns that some non-metropolitan workers may face significant costs to employment displacements associated with economic adjustments. This paper explores the roles that linkages to metropolitan labor markets, area labor market conditions, and individual attributes play in determining the rates of exit from unemployment to employment among non-metropolitan area residents. Adjacency to a metropolitan area is found to significantly increase transition rates from unemployment to employment among displaced non-metropolitan workers, but local economic conditions are found to have relatively weak or insignificant effects on transition rates. Also, lack of post-high school education and minority status both significantly reduce rates of exit from unemployment in non-metropolitan areas following employmentdisplacement. [source]


    Socioeconomic Incentives to Teach in New York and North Carolina: Toward a More Complex Model of Teacher Labor Markets, 1800-1850

    HISTORY OF EDUCATION QUARTERLY, Issue 1 2006
    Kim Tolley
    First page of article [source]


    Labor Markets and Social Policy in Central and Eastern Europe: The Accession and Beyond , Edited by Nicholas Barr

    INDUSTRIAL RELATIONS JOURNAL, Issue 6 2006
    Anna SoulsbyArticle first published online: 1 NOV 200
    No abstract is available for this article. [source]


    Labor Movement: How Migration Regulates Labor Markets , By Harald Bauder

    INTERNATIONAL JOURNAL OF URBAN AND REGIONAL RESEARCH, Issue 1 2008
    Adina Batnitzky
    No abstract is available for this article. [source]


    Labor Movement: How Migration Regulates Labor Markets, by Harald Bauder

    JOURNAL OF REGIONAL SCIENCE, Issue 3 2008
    Oded Stark
    First page of article [source]


    Spillover Effects of Welfare Reforms in State Labor Markets

    JOURNAL OF REGIONAL SCIENCE, Issue 4 2002
    Timothy J. Bartik
    This paper estimates the effects of welfare reforms on a state's employment and wage rates. Welfare reforms include: pushing welfare recipients into the labor force, financial incentives to recipients for working, wage subsidies to employers of recipients, and community service jobs for recipients. The effects of these policies are analyzed using a newly estimated model of state labor markets. Simulations show that jobs found by welfare reform participants cause sizable displacement effects for nonparticipants. Displacement effects of labor supply policies are highest when a state's unemployment is high, whereas displacement effects of labor demand policies are highest when a state's unemployment is low. [source]


    Moving off the farm and intensifying agricultural production in Shandong: a case study of rural labor market linkages in China

    AGRICULTURAL ECONOMICS, Issue 2 2009
    Jikun Huang
    Off-farm employment; Fruit production; Labor market; Linkages Abstract This study examines linkages between off-farm labor markets and the labor allocated by farmers to on-farm production of fruit crops. Using a stratified random sample of rural households in Shandong Province, we find that young and educated members of the labor force tend to work more frequently in the off-farm labor market, and that off-farm employment reduces the likelihood and intensity of fruit production. Fruit production is associated with lower levels of off-farm employment. Households and individuals who are less likely (or able) to find off-farm employment can benefit from shifting into fruit production. Although off-farm employment is an important avenue out of poverty, fruit production provides ways for the less educated and older households to raise their income. [source]


    Regional labor markets in Finland: Adjustment to total versus region-specific shocks

    PAPERS IN REGIONAL SCIENCE, Issue 3 2002
    Sari Pekkala
    Labor market; employment; unemployment; migration; shock adjustment Abstract This article analyses regional labor market adjustment in the Finnish provinces during 1976,2000. We investigate the inter-relations of employment, unemployment, labor force participation, and migration to see how a change in region-specific and total labor demand is adjusted. The analysis reveals that region-specific labor demand shocks adjust mainly via participation, whereas total shocks are adjusted by unemployment. The region-specific component of labor demand shock has shorter-lived effects on unemployment and participation, but its effect on employment is permanent. Conversely, total shocks leave no permanent effect. Migration is more important in the region-specific case where, after a few years, it acquires a large role in the adjustment process. [source]


    The Economist as Engineer: Game Theory, Experimentation, and Computation as Tools for Design Economics

    ECONOMETRICA, Issue 4 2002
    Alvin E. Roth
    Economists have lately been called upon not only to analyze markets, but to design them. Market design involves a responsibility for detail, a need to deal with all of a market's complications, not just its principle features. Designers therefore cannot work only with the simple conceptual models used for theoretical insights into the general working of markets. Instead, market design calls for an engineering approach. Drawing primarily on the design of the entry level labor market for American doctors (the National Resident Matching Program), and of the auctions of radio spectrum conducted by the Federal Communications Commission, this paper makes the case that experimental and computational economics are natural complements to game theory in the work of design. The paper also argues that some of the challenges facing both markets involve dealing with related kinds of complementarities, and that this suggests an agenda for future theoretical research. [source]


    Black Employment, Segregation, and the Social Organization of Metropolitan Labor Markets

    ECONOMIC GEOGRAPHY, Issue 3 2007
    Niki T. Dickerson
    Abstract: This broad analysis of the employment of blacks in metropolitan areas examines the role of residential segregation in comparison with four other key structural explanations for racial metropolitan inequality: industrial composition, minority concentration, immigration, and the racial disparity in skills. The goal of the analysis was to determine whether the spatial configuration of blacks relative to whites in a metropolitan area influences the employment rates of black men and black women in the context of the structural conditions of the local labor market. The study expanded the analysis of space and work beyond an emphasis on the physical distance between black communities and jobs to a broader conceptualization of residential segregation as a structural feature of the entire metropolitan labor market that is representative of its social organization with regard to race. Using a longitudinal data set of the structural characteristics of the 95 largest U.S. cities from the 1980, 1990, and 2000 decennial censuses, the study used a cross-sectional analysis of the cities in 2000 and a fixed-effects analysis to assess the impact of five dimensions of residential segregation and the four other structural factors on the employment of blacks across different labor markets and across time within each labor market. The results revealed that when the other structural characteristics are controlled, the employment rates of blacks are lower in more segregated cities and decrease as cities become more segregated over time. The clustering and evenness dimensions of residential segregation were the most determinative of black employment. [source]


    Methods to Test the Spatial Mismatch Hypothesis

    ECONOMIC GEOGRAPHY, Issue 4 2005
    Donald S. Houston
    Abstract: The spatial mismatch hypothesis postulates that employment deconcentration within U.S. metropolitan areas goes some way toward explaining higher unemployment and lower wages among ethnic minority groups, since these groups are more likely to reside in central-city areas. However, little consensus has emerged on the importance of spatial mismatch in explaining disadvantage in the labor market. This article argues that conflicting evidence is the result of the variety of methods that have been used to test the spatial mismatch hypothesis. Moreover, it draws attention to a number of hitherto uncovered flaws in some of these methods that introduce systematic biases against finding evidence in support of the hypothesis. In light of these flaws, favored methods for future research are highlighted. Drawing on evidence from British conurbations that display similar spatial inequalities to U.S. metropolitan areas despite much smaller ethnic minority populations, the article contends that race does not lie at the heart of the spatial mismatch problem. Three areas in which the spatial mismatch hypothesis should be reconceptualized are identified: first, its emphasis should be on spatial, not racial, inequalities; second, it needs to differentiate between residential immobility and residential segregation, which are quite different; and third, it needs to recognize that the extent and the effect of spatial mismatch are distinct and should be measured separately. [source]


    THEORIZING THE UNIVERSITY AS A CULTURAL SYSTEM: DISTINCTIONS, IDENTITIES, EMERGENCIES

    EDUCATIONAL THEORY, Issue 3 2006
    Mark Considine
    In this essay, Mark Considine argues that the prospect of such changes requires us to reflect carefully upon the theoretical and normative underpinnings of universities and to delineate the structures and processes through which they might seek to negotiate their identities. Considine re-theorizes the university as a higher education system composed by distinctions and networks acting through an important class of boundary objects. He moves beyond an environmental analysis, asserting that systems are best theorized as cultural practices based upon actors making and protecting important kinds of distinctions. Thus, the university system must be investigated as a knowledge-based binary for dividing knowledge from other things. This approach, in turn, produces an identity-centering (cultural) model of the system that assumes universities must perform two different acts of distinction to exist: first, they must distinguish themselves from other systems (such as the economy, organized religion, and the labor market), and, second, they must operate successfully in a chosen resource environment. Ultimately, Considine argues that while environmental problems (such as cuts in government grants) may generate periodic crises, threats within identities produce emergencies generating a radical kind of problematic for actor networks. [source]


    Overview and Perspectives of Employment in People with Epilepsy

    EPILEPSIA, Issue 2005
    Hanneke M. De Boer
    Summary:, Even though it is now the viewpoint of the majority of professionals working in epilepsy care that most people with epilepsy should and can perform on the labor market as does anybody else, research tells a different story. Most figures concerning employment rates of people with epilepsy indicate that they do not perform as well on the labor market as others do. Although both research figures and research groups vary, generally unemployment rates are higher for people with epilepsy than for the general population. Early studies showed that the situation for people with epilepsy was rather grim. Later studies showed similar outcomes. Unemployment rates vary between groups and countries. Research shows that being employed is an important ingredient of the quality of life of people with epilepsy. The World Health Organization also recognizes the importance of employment as a part of social health, and therefore, improving the quality of life. It is important to know the perspectives on the labor market for people with epilepsy and what the possible problems are. I describe a Dutch research project and give an overview of the findings concerning the employment and consequent employability of people with epilepsy and questions pertaining to employment and epilepsy. Possible interventions [i.e., public education and employment programs for people with epilepsy with the aim to improve the (re)integration of people with epilepsy into the labor market, thus improving the quality of life of (potential) employees with epilepsy], are described extensively. [source]


    Workers in the New Economy: Transformation as Border Crossing

    ETHOS, Issue 1 2006
    Valerie Walkerdine
    In this article, I seek to make an intervention in debates between psycho-logical and postmodern anthropology by engaging with the theme of border crossing. I argue that the theme of the border is one that fundamentally instantiates a separation between interior and exterior with respect to subjectivity, itself a funda-mental transformation and a painful and difficult border. This is related to a Cartesian distinction critiqued in this article. How the distinction between interior and exterior may be transcended is discussed in relation to examples of transformation from the crossing of class borders to the production and regulation of workers in a globalized and neoliberal economy. I begin with reference to postwar transformations of class with its anxious borders and go on to think about changes in the labor market and how these demand huge transformations that tear apart communities, destroy work-places, and sunder the sense of safety and stability that those gave. Advanced liberalism or neoliberalism brings with it a speeding up of the transformations of liberalism in which subjects are constantly invoked as self-contained, with a trans-portable self that must be produced through the developmental processes of personality and rationality. This self must be carried like a snail carries a shell. It must be coherent yet mutable, fixed yet multiple and flexible. But this view of the subject covers over the many connections that make subjectivity possible. I conclude by ask-ing what it would mean to rethink this issue of the production of safe spaces beyond an essentialist psychological conception of only one mother child space, separated from the social world, as having the power to produce feelings of safety? I end the article with an argument for a relational approach to subjectivity and sociality. [subjectivity, relationality, neoliberalism, workers, class] [source]


    From ,welfare without work' to ,buttressed liberalization': The shifting dynamics of labor market adjustment in France and Germany

    EUROPEAN JOURNAL OF POLITICAL RESEARCH, Issue 3 2008
    MARK I. VAIL
    Scholars blame this disease on dysfunctional political arrangements, deep insider-outsider cleavages and failed systems of social partnership. As a result, the two countries are said to be more or less permanently mired in a context of high unemployment that is highly resistant to remediation. This article departs from this conventional wisdom in two important respects. First, it argues that France and Germany have undertaken major reforms of their labor market policies and institutions during the past decade and remediated many of their longstanding employment traps. Second, it shows that the political arrangements that adherents of the ,welfare without work' thesis identify as reasons for sclerosis have evolved quite dramatically. The article supports these arguments by exploring some of the most significant recent labor market reforms in the two countries, as well as the shifting political relationships that have driven these changes. In both countries, recent labor market reforms have followed a trajectory of ,buttressed liberalization'. This has involved, on the one hand, significant liberalization of labor market regulations such as limits on overtime and worker protections such as unemployment insurance. On the other hand, it has entailed a set of supportive, ,buttressing' reforms involving an expansion of active labor market policies and support for workers' efforts to find jobs. The article concludes that these developments provide reasons for optimism about the countries' economic futures and offer important lessons about how public policy can confront problems of labor market stagnation. [source]


    Did the Hartz Reforms Speed-Up the Matching Process?

    GERMAN ECONOMIC REVIEW, Issue 3 2009
    A Macro-Evaluation Using Empirical Matching Functions
    Empirical matching function; stock-flow matching; Hartz reform Abstract. Starting in January 2003, Germany implemented the first two so-called Hartz reforms, followed by the third and fourth packages of Hartz reforms in January 2004 and January 2005, respectively. The aim of these reforms was to accelerate labor market flows and reduce unemployment duration. Without attempting to evaluate the specific components of these Hartz reforms, this paper provides a first attempt to evaluate the overall effectiveness of the first two reform waves, Hartz I/II and III, in speeding up the matching process between unemployed and vacant jobs. The analysis is conceptually rooted in the flow-based view underlying the reforms, estimating the structural features of the matching process. The results indicate that the reforms indeed had an impact in making the labor market more dynamic and accelerating the matching process. [source]


    Cities, Skills, and Inequality

    GROWTH AND CHANGE, Issue 3 2005
    CHRISTOPHER H. WHEELER
    ABSTRACT The surge in U.S. wage inequality over the past several decades is now commonly attributed to an increase in the returns paid to skill. Although theories differ with respect to why, specifically, this increase has come about, many agree that it is strongly tied to the increase in the relative supply of skilled (i.e., highly educated) workers in the U.S. labor market. A greater supply of skilled labor, for example, may have induced skill-biased technological change or generated greater stratification of workers by skill across firms or jobs. Given that metropolitan areas in the U.S. have long possessed more educated populations than non-metropolitan areas, these theories suggest that the rise in both the returns to skill and wage inequality should have been particularly pronounced in cities. Evidence from the U.S. Census over the period of 1950 to 1990 supports both implications. [source]


    The Onset of Health Problems and the Propensity of Workers to Change Employers and Occupations

    GROWTH AND CHANGE, Issue 3 2003
    Jodi Messer Pelkowski
    Although many studies have investigated how poor health affects hours of work and labor force participation, few have examined the extent to which individuals adapt in order to remain in the labor market. Individuals experiencing health problems may move to different types of work in order to remain in the labor force or to reduce the negative labor market consequences of illness. This paper investigates the movement between employers, and among occupation categories when changing employers, using data from the Health and Retirement Study (HRS). One advantage of the HRS is that its questions on life-cycle employment and health patterns permit a long-term perspective on job mobility that is unavailable in most other datasets. Workers with health problems are more likely than healthy workers to remain with their current employer than to switch employers. But among those who switch employers, those with health problems are more likely to change broad occupational categories than are healthy workers. While many individuals remain with the same employer after the onset of health problems, many do switch employers and occupations, even in the presence of ADA legislation. [source]


    Unemployment, Growth, and Trade Unions

    GROWTH AND CHANGE, Issue 1 2001
    Henri L. F. De Groot
    This paper develops a two-sector endogenous growth model with a dual labor market caused by the operation of trade unions. Trade unions strive for the extraction of rents from the growth generating imperfectly competitive primary sector. This union behavior results in a non-competitive wage differential between the primary and secondary (perfectly competitive) sector. How the relationship between growth and unemployment depends on the institutional details of the labor market is analyzed. In general, growth and unemployment are intimately related for two reasons. Unemployment affects the scale of operation of the economy and thereby the growth rate. Growth affects inter-temporal decisions of workers about where to allocate on the labor market once they are laid off, and thereby it affects equilibrium unemployment. [source]


    A common language for classifying and describing occupations: The development, structure, and application of the standard occupational classification

    HUMAN RESOURCE MANAGEMENT, Issue 3 2002
    Leslie J. Pollack
    Today's technology-driven global economy forces job seekers, employees, human resources professionals, and managers to work smarter and faster to take advantage of a changing labor market. A common language for describing job titles and task/competency-based occupational clusters will facilitate crucial information sharing critical to meeting today's HR challenges. The Standard Occupational Classification (SOC) captures the current occupational structure, and can be used by the public and private sectors to share information on all types of jobs. This article discusses the development and applications of the new SOC that will help job seekers, employees, human resources professionals, and management. © 2002 Wiley Periodicals, Inc. [source]


    The Growing Importance of Family: Evidence from Brothers' Earnings

    INDUSTRIAL RELATIONS, Issue 1 2007
    DAVID I. LEVINE
    We examine between-brother correlation of earnings, family income, and wages from two cohorts of the National Longitudinal Surveys. Young brothers who entered the labor market in the 1970s had lower correlations of economic outcomes than did those who entered in the 1980s and early 1990s. Neither the rising brother correlation in education nor the rising return to schooling accounts for much of the increase in the brother correlation in earnings. These results suggest that family and community influences other than years of education that are shared by brothers have become increasingly important in determining economic outcomes. [source]


    Unemployment insurance and the business cycle*

    INTERNATIONAL ECONOMIC REVIEW, Issue 3 2003
    Laura Brown
    An equilibrium model is developed to study the interaction of the business cycle, unemployment insurance (UI), and the labor market for young men in Canada. The model combines optimal job offer, layoff, and recall decisions within a numerically solved and restricted Bayesian,Nash equilibrium. We consider the long-run implications of changes made to unemployment insurance in Canada during the 1990s. The changes lead to equilibrium increases in average rates of unemployment, layoffs, and recalls. Eliminating UI lowers the equilibrium unemployment rate and average observed earnings. UI policy affects the timing of cycles of endogenous outcomes relative to the productivity cycle. [source]


    PRODUCT MARKET AND THE SIZE,WAGE DIFFERENTIAL*

    INTERNATIONAL ECONOMIC REVIEW, Issue 1 2002
    SHOUYONG SHI
    Using directed search to model the product market and the labor market, I show that large plants can pay higher wages to homogeneous workers and earn higher expected profit per worker than small plants, although plants are identical except size. A large plant charges a higher price for its product and compensates buyers with a higher service probability. To capture this size- related benefit, large plants try to become larger by recruiting at high wages. This size,wage differential survives labor market competition because a high wage is harder to get than a low wage. Moreover, the size,wage differential increases with the product demand when demand is initially low and falls when demand is already high. [source]