Working Paper: NBER ID: w9911
Authors: Kevin Lang; Sumon Majumdar
Abstract: This paper examines nonsequential search when jobs vary with respect to nonpecuniary characteristics. In the presence of frictions in the labor market, the equilibrium job distribution need not show evidence of compensating wage differentials. The model also generates several pervasive features of labor markets: unemployment and vacancies, apparent discrimination, and market segmentation. When workers are homogeneous, restrictions on the range of job offers decrease welfare and cannot reduce unemployment. However, when workers have heterogeneous preferences, such restrictions may lower unemployment and can even lead to a Pareto-improvement in welfare. We consider the impact of policies banning discrimination, regulating working-conditions and imposing a minimum wage.
Keywords: Labor Market; Job Characteristics; Wage Differentials; Market Frictions; Discrimination
JEL Codes: J3; J2; J6; J7
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| job characteristics (M54) | wage differentials (J31) |
| restrictions on job offers (J68) | overall welfare (I31) |
| heterogeneous preferences (D11) | unemployment (J64) |
| policies banning discrimination (J78) | worker outcomes (J28) |
| minimum wage laws (J38) | expected utility for workers (D11) |
| job characteristics (M54) | market dynamics (D49) |