Expertise or Experience: What Raises Pay?

Fabien Postel-Vinay and Jean-Marc Robin

No 1295, Econometric Society World Congress 2000 Contributed Papers from Econometric Society

Abstract: An equilibrium job search model with on-the-job-search is presented and solved, in which we allow firms to implement optimal wage posting strategies in the sense that they leave no rent to their employees and counter the offers received by their employees from competing firms. Cross-firm productivity dispersion arises endogenously in equilibrium. The model delivers a hump-shaped aggregate earnings distribution that reflects both firm- and worker-heterogeneity. The model also generates plausible individual career paths on the basis of which it is estimated, using a French panel of wages over the period 1994-96.

Date: 2000-08-01
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