This essay deals with wage dispersion, the Burdett-Mortensen model is applied to a set of data collected from the year 1973 – 1989. The Burdett-Mortensen model aims to explain the reasons for wage dispersion between similar able individuals. The purpose of this essay is to test the Burdett-Mortensen model accuracy in explaining wage dispersion between similar able people, by applying it to male supervisors in Sweden between 1973 and 1989. The results of this test are mixed, meaning that no clear judgment can be done to validate or reject the accuracy of the assumptions made by the authors of this model. These results leads to the conclusion that further more expansive test of this model is required to make such a judgement.

<p>This essay deals with wage dispersion, the Burdett-Mortensen model is applied to a set of data collected from the year 1973 – 1989. The Burdett-Mortensen model aims to explain the reasons for wage dispersion between similar able individuals. The purpose of this essay is to test the Burdett-Mortensen model accuracy in explaining wage dispersion between similar able people, by applying it to male supervisors in Sweden between 1973 and 1989. The results of this test are mixed, meaning that no clear judgment can be done to validate or reject the accuracy of the assumptions made by the authors of this model. These results leads to the conclusion that further more expansive test of this model is required to make such a judgement.</p>

Wage structure has shown to be crucial for firms and workers. However, there existwage dispersion for identical workers in labor markets. The paper measures the effectof industry and firm size on wages in Sweden. The results show that both industry andfirm size have significant effects on wages. Regarding the explanation factors, thefinding is that human capital factors can explain a portion of the industry wagedifferentials, but have less impact on wage differentials across firm size. However,compensating differentials and union organization are not the determinants of theindustry wage differentials and firm size-wage effects. In addition, unobservedindividual characteristics can partly explain firm size effect on wages, but cannotexplain industry wage differentials based on our samples.

Wage compression was an important goal for Swedish blue-collar trade unions during the post-war period. This was achieved during the period 1956-1982 and is credited by many due to the writings of trade union-economists Gösta Rehn and Rudolf Meidner. However some scholars question the substantial impact that is credited to the program drafted from Rehn and Meidners writings, some mean to say that the market could be equally if not sole creditable or responsible for the Swedish development of wage compression. This paper compares the development of wage compression and dispersion between Norway and Sweden during the said period in order to find out which had more impact: the market or trade union ideology? The result is two-pronged: The market forces put the terms for a similar development during the period, the Swedish wage policies put the terms for the differences.

In my first chapter, I provide a solution for how to model bargaining when there is on-the-job search and worker turnover depends on the wage. Bargaining is a standard feature in models without on-the-jobs search, but, due to endogeneity of the match surplus, a solution does not exist when worker turnover depends on the wage. My solution is based on wages being infrequently renegotiated. With renegotiation, the equilibrium wage distribution and the bargaining outcomes are both unique and the model nests earlier models in the literature as limit cases when wages are either continuously or never renegotiated. Furthermore, the rate of renegotiation has important implications for the nature of the equilibrium. A higher rate of renegotiation lowers the response of the match duration to a wage increase, which decreases a firm's willingness to accept a higher wage. This results in a lower share of the match surplus going to the worker. Moreover, a high rate of renegotiation also lowers the positive wage spillovers from a minimum wage increase, since these spillovers rely on firms' incentives to use higher wages to reduce turnover. In the standard job ladder model, search is modelled via an employment-specific Poisson rate. The size of the Poisson rate governs the size of the search friction. The Poisson rate can represent the frequency of applications by workers or the rate at which firms post suitable vacancies. In the second chapter, which is co-authored with Jake Bradley, we set up a model which has both of these aspects. Firms infrequently post vacancies and workers occasionally apply for these vacancies. The model nests the standard job ladder model and a version of the stock-flow model as special cases while remaining analytically tractable and easy to estimate empirically from standard panel data sets. The structurally estimated parameters are consistent with recent survey evidence of worker behavior. The model fits moments of the data that are inconsistent with the standard job ladder model and in the process reconciles the level of frictional wage dispersion in the data with replacement ratios used in the macro labor literature. In my third chapter, which is co-authored with Coen Teulings, we develop a simple method to measure the position in the job ladder in models with on-the-job search. The methodology uses two implications from models with on-the-job search: workers gradually select into better paying jobs until they get laid off at which time they start again to climb the job ladder. The measure relies on two sources of variation: (i) time-variation in job-finding rates and (ii) individual variation in the time since the last lay-off. We use the method to quantify the returns to on-the-job search and to establish the shape of the wage offer distribution by means of simple OLS regressions with wages as dependent variables. Moreover, we derive a simple prediction on the distribution of job durations. Applying the method to the NLSY 79, we find strong support for this class of models. We estimate the standard deviation of the wage offer distribution to be 12%. OJS accounts for 30% of the experience profile and 9% of the total wage dispersion.

<p>Calmfors and Driffill in 1988 argued that there is a humpshaped relation between the degree of centralisation in wage bargaining structures within an economy and unemployment. They collected aggregate economic data from 17 different OECD economies and ranked them according to their relative degree of centralisation to prove their model. The model was further developed by Rowthorn who in 1992, using individual data from the same countries, concluded that there is a negative linear relationship between the degree of centralisation in wage bargaining structures and wage dispersion.</p><p>During the past two decades the Russian economy, as well as the Russian trade union movement, has transformed greatly. Membership rates in trade unions have fallen and bargaining leverage of trade unions vis-á-vis employers has decreased. Using data from ten sectors within the Russian economy (collected in interviews with trade union representatives in Moscow, June 2006) this essay questions whether the theoretical assumptions above hold in the Russian context. By ranking the sectors according to their relative degree of centralisation in wage bargaining structures and using these rankings as explanatory variables in econometric analyses with unemployment rates and wage dispersion rates as dependent variables, this essay finds little proof that the theoretical framework of Calmfors and Driffill holds within the Russian economy. However, Rowthorn’s model of centralisation and wage dispersion seems to be more valid.</p>

Calmfors and Driffill in 1988 argued that there is a humpshaped relation between the degree of centralisation in wage bargaining structures within an economy and unemployment. They collected aggregate economic data from 17 different OECD economies and ranked them according to their relative degree of centralisation to prove their model. The model was further developed by Rowthorn who in 1992, using individual data from the same countries, concluded that there is a negative linear relationship between the degree of centralisation in wage bargaining structures and wage dispersion. During the past two decades the Russian economy, as well as the Russian trade union movement, has transformed greatly. Membership rates in trade unions have fallen and bargaining leverage of trade unions vis-á-vis employers has decreased. Using data from ten sectors within the Russian economy (collected in interviews with trade union representatives in Moscow, June 2006) this essay questions whether the theoretical assumptions above hold in the Russian context. By ranking the sectors according to their relative degree of centralisation in wage bargaining structures and using these rankings as explanatory variables in econometric analyses with unemployment rates and wage dispersion rates as dependent variables, this essay finds little proof that the theoretical framework of Calmfors and Driffill holds within the Russian economy. However, Rowthorn’s model of centralisation and wage dispersion seems to be more valid.

This paper investigates in what way employment for low-skilled workers is connected to the wage dispersion in a country by comparing Sweden to six European countries. Previous research on this topic used cross-section analysis, but this essay takes another approach by comparing the changes in the wage dispersion and employment and by breaking down the change in the wage dispersion into parts and studying the change in the wage for different percentiles. The paper finds that wages in Sweden have not converged, which likely contributed to the increase in the employment gap between people with high and low skills. Two countries with different development were Germany and Norway. In line with recent research, in Germany, wage inequality increased and the employment gap between people with high and low skills decreased. In comparison, the case of Norway has not received much attention among researchers. Wages converged more in Norway than in Germany, yet employment increased more in Germany. The paper suggests a potential explanation: wages for the bottom percentiles of the earnings distribution fell in Germany, which it did not in Norway.

A lo largo de los ultimos diez años los economistas hemos reconocido que en muchos casos las decisiones individuales se ven afectadas por las decisiones, los comportamientos las preferencias de otros agentes no solamente atraves del mercado sino tambien directamente por imitacion o aprendimiento, por el desarrollo de reglas sociales compartidas, por la difusion de informacion. Muchos estudios han estudiado estos mecanismos en varios contextos. Entre otros destacan la educacion, el mercado laboral, la criminalidad, las habitudines sanitarias. La relevancia de estos efectos de neighborhood es positiva y normativa a la vez. Por un lado, su existencia contribuye a la comprension de la extrema variabilidad de algunos fenomenos economicos entre grupos de individuos aparentemente homogeneos. Por otro lado, su existencia es una componente fundamental para el desarollo de intervenciones eficientes por parte del policy maker. Los estudios de la tesis analizan estos efectos en el contexto de las decisiones esscolares y en el mercado laboral. En el primer capitulo se muestra como la decision y el exito en completar la educacion segundaria por parte de los varones adolescentes afecta positivamente la de las mujeres de la misma edad residentes en las mismas ciudades. La muestra campionaria utilizada permite conlcuir que la correlacion entre los exitos de los varones y de las mujeres corresponde de hecho a una relacion causal entre las dos variables. Se concluye que cualquier intervencion que consiga aumentar la probabilidad de completar los estudios segundarios de los varones del uno por ciento tendrà como consequencia tambien un aumento de la probabilidad de las mujeres adolescentes de completar estos estudios entre 0.6 y 0.7 por ciento. En el segundo capitulo se evaluan los efectos sobre la durada del paro de pertenecer a un grupo social mas amplio.

Wage dispersion is one of the social and economic issues arousing public concern in Hong Kong. There are many studies exploring the possible causes and changes in wage dispersion. They often focus on the study of summary measures such as Gini and Theil indexes, or adopt OLS-based regression approach. In foreign studies on wage dispersion, Oaxaca-Blinder decomposition, originated from Oaxaca (1974) and Blinder (1973), is a common method of decomposing changes or differences in mean wages between two groups into wage structure effect and composition effect, and then further decomposing the two effects into contributions of each control variable. Nevertheless, focusing on summary measures or decomposing mean wages can just give people an insight into the causes and changes in general wage dispersion but not the entire wage distribution. As pointed out by Chi, Li and Yu (2007), the estimation of the entire wage distribution and decomposition of the distributional changes in wage dispersion has been attracting the attention of labour economists. This thesis adopts a distributional approach proposed by Firpo, Fortin and Lemieux (2007) to study the changes in wage dispersion of Hong Kong since 1980s. The FFL approach comprises a two-stage procedure. Firstly, changes in dispersion are divided into wage structure effect and composition effect without directly estimating a wage-setting model. This is done by doing a proper reweighting to obtain counterfactual wage vectors. Kernel density estimation is used for visualizing the wage distribution in different years and the counterfactuals; secondly, novel recentered influence function (RIF) regressions across quantiles are performed to further decompose the two effects into contributions of each control variable. The findings are outlined as follows: first, there was an increase in wage dispersion over the whole wage distribution from 1980s but a decrease from 2001 to 2006; second, the composition effect dominates the wage structure effect over years; third, changes in the distribution of characteristics and the returns to these characteristics are highly responsive to each other, suggesting that our labour market is highly responsive to structural changes; fourth, The common wage-determining factors may not be able to explain the earnings-profile of low wage earners well. In brief, the development of the economy since 1980s increased the wage dispersion over years. Nevertheless, the economic downturn due to external shocks and internal unfavourable events and general skill-upgrading in labour-intensive industries decreased the wage dispersion since 2000s.