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Can the Mortensen-Pissarides Model with Productivity Changes Explain U.S. Wage Inequality?

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  • Linda Y. Wong

    (Binghamton University)

Abstract
This article examines whether the Mortensen-Pissarides matching model with productivity changes can explain the time pattern of wage inequality. The main finding is that the model produces counterfactual results. The main source of failure seems to be the exogenous matching function and/or the exogenous surplus share, neither of which allows firms to use wage policies to direct workers' searches.

Suggested Citation

  • Linda Y. Wong, 2003. "Can the Mortensen-Pissarides Model with Productivity Changes Explain U.S. Wage Inequality?," Journal of Labor Economics, University of Chicago Press, vol. 21(1), pages 70-105, January.
    • Handle: RePEc:ucp:jlabec:v:21:y:2003:i:1:p:70-105
    DOI: 10.1086/344124
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    References listed on IDEAS

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    Cited by:

    1. Yip, Chi Man, 2010. "Can't SBTC explain the U.S. wage inequality dynamics?," MPRA Paper 31198, University Library of Munich, Germany.
    2. Capatina, Elena, 2014. "Skills and the evolution of wage inequality," Labour Economics, Elsevier, vol. 28(C), pages 41-57.
    3. Yashiv, Eran, 2007. "Labor search and matching in macroeconomics," European Economic Review, Elsevier, vol. 51(8), pages 1859-1895, November.
    4. Andrea Mario Lavezzi, 2006. "On High‐Skill And Low‐Skill Equilibria: A Markov Chain Approach," Metroeconomica, Wiley Blackwell, vol. 57(2), pages 121-157, May.
    5. Summerfield, Fraser, 2014. "Labor Market Conditions, Skill Requirements and Education Mismatch," CLSSRN working papers clsrn_admin-2014-19, Vancouver School of Economics, revised 28 Apr 2014.
    6. Fraser Summerfield & Ioannis Theodossiou, 2017. "The Effects Of Macroeconomic Conditions At Graduation On Overeducation," Economic Inquiry, Western Economic Association International, vol. 55(3), pages 1370-1387, July.
    7. Andrew Kerr, 2012. "A Model of Comparative Advantage with Matching in the Urban Tanzanian Labour Market," CSAE Working Paper Series 2012-21, Centre for the Study of African Economies, University of Oxford.
    8. Anders Frederiksen & Odile Poulsen, 2016. "Income Inequality: The Consequences Of Skill-Upgrading When Firms Have Hierarchical Organizational Structures," Economic Inquiry, Western Economic Association International, vol. 54(2), pages 1224-1239, April.
    9. Xavier Cuadras Morató & Xavier Mateos-Planas, 2006. "Wage Inequality and Unemployment with Overeducation," Working Papers 249, Barcelona School of Economics.
    10. Marcus Hagedorn & Iourii Manovskii & Sergiy Stetsenko, 2016. "Taxation and Unemployment in Models with Heterogeneous Workers," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 19, pages 161-189, January.
    11. Michael Sattinger, 2003. "Capital Intensity, Neutral Technological Change, and Earnings Inequality," Discussion Papers 03-05, University at Albany, SUNY, Department of Economics.
    12. Chul‐In Lee, 2010. "Can Search‐Matching Models Explain Migration And Wage And Unemployment Gaps In Developing Economies? A Calibration Approach," Journal of Regional Science, Wiley Blackwell, vol. 50(2), pages 635-654, May.
    13. Ingram, Beth F. & Neumann, George R., 2006. "The returns to skill," Labour Economics, Elsevier, vol. 13(1), pages 35-59, February.

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