Directed Search and Inter-industry Wage Differentials
نویسنده
چکیده
Directed search models are specified to explain the observed wage dispersion. This class of models generates wage dispersion with homogenous workers across firms. Recent work has extended this theoretical framework to offer a possible resolution of inter-industry wage differentials (IWDs) with multiple skill types. I perform a GMM estimation of an extension of a directed search model (Shimer; 2005) with data from the CPS and NIPA. Results from the estimation indicate the standard model is able to generate wage dispersion within skills groups. A wage decomposition is performed by category: human capital, physical capital, and the search friction. ∗A special thanks to Professor Beth Ingram, Professor George Neumann, Neal Olitsky, and Kurt Lewis, without their advice this paper would not have been possible. All errors in this paper are my own. Spring 2010 Kurt, Mark R. 2
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