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Publication: Job Search, Bargaining, and Wage Dynamics

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Title Job Search, Bargaining, and Wage Dynamics
Authors/Editors* Shintaro Yamaguchi
Where published* Journal of Labor Economics
How published* Journal
Year* 2010
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Abstract
This paper constructs and estimates a model of wage bargaining with on-the-job search to explore three different components of wages: general human capital, match-specific capital, and outside options. 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 the outside option raises wages by 14-16% in the first five years.
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