Wage dispersion with heterogeneous wage contracts

I study a labor market in which identical workers search on- and off-the-job heterogeneous firms employ using either an ex-ante posted wage or flexible contracts contingent on outside options. Firm level costs for generate segmented equilibrium less productive post wages. The model with can achieve dispersion, share, employment transitions, flow value of unemployment that are simultaneously consistent empirical observations while capturing information frictions externalities modeled by posting. In contrast to well known results regarding pure posting models, good fit these data be achieved even when the vast majority Matching moments U.S. economy 2010s implies roughly 58 percent wages nearly 30 under such contracts.