Endogenous Job Destructions and the Distribution of Wages
نویسندگان
چکیده
In this paper, we argue that firing decisions of firms can help explain the shape of the wage distribution. To emphasize this result, we consider a matching model with both idiosyncratic productivity shocks that hit jobs and heterogeneity of workers according to ex ante unobservable abilities. Computation experiments show that the model can generate a hump-shaped wage distribution despite assuming a uniform distribution of shocks and a Pareto distribution of abilities.
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