English, Article, Journal or magazine article edition: Job Search, Bargaining, and Wage Dynamics Shintaro Yamaguchi

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Physical Description
  • preprint
Language
  • English

Edition details

Title
  • Job Search, Bargaining, and Wage Dynamics
Author
  • Shintaro Yamaguchi
Physical Description
  • preprint
Notes
  • What are the sources of rapid wage growth during a worker’s early career? To address this question, I construct and estimate a model of strategic wage bargaining with on-the-job search to explore three different components of wages: general human capital, match-specific capital, and outside option. Workers search for alternative job opportunities on the job and accumulate human capital through learning-by-doing. As the workers find better job opportunities, the current employer has to compete with outside firms to retain them. This between-firm competition improves the outside option value of the worker, which results in wage growth on the job even when productivity remains the same. The model is estimated by a simulated minimum distance estimator and data from the NLSY 79. The parameter estimates are used to simulate counterfactuals. The results indicate that the improved value of outside option raises wages of ten-year-experienced workers by 16%, which accounts for about 30% of the wage growth during the first ten years of career. I also find that human capital accumulation affects wage profile not only because it directly changes labor productivity, but also because it alters job search behavior due to low future productivity.
  • Search, Matching, Age-earnings profile, Structural Estimation
  • RePEc:mcm:deptwp:2007-03
  • What are the sources of rapid wage growth during a worker's early career? To address this question, I construct and estimate a model of strategic wage bargaining with on-the-job search to explore three different components of wages: general human capital, match-specific capital, and bargaining position. Workers search for alternative job opportunities on the job and accumulate human capital through learning-by-doing. As the workers find better job opportunities, the current employer has to compete with outside firms to retain them. This between-firm competition improves the outside option value of the worker, which results in wage growth on the job even when productivity remains the same. The model is estimated by a simulated minimum distance estimator and data from the NLSY 79. The parameter estimates are used to simulate counterfactuals. Through these simulations I find that only 60% of the observed wage growth reflects the accumulation of general human capital. The growth match-specific capital through job changes accounts for about 20%. The improved bargaining position explains the remaining 20% of the wage growth. The results suggest that labor market frictions explain a larger part of wage growth than previously considered in the literature.
  • RePEc:dpr:wpaper:0658
  • This paper constructs and estimates a model of strategic wage bargaining with on-the-job search to explore three different components of wages: general human capital, match-specific capital, and outside option. As the workers find better job opportunities, the current employer has to compete with outside firms to retain them. This between-firm competition results in wage growth even when productivity remains the same. The model is estimated by a simulated minimum distance estimator and data from the NLSY79. The results indicate that the improved value of outside option raises wages of ten-year-experienced workers by 16%.
  • RePEc:hst:ghsdps:gd08-026
Language
  • English
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