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Title: Work Incentives and Labour Mobility: Quantitative Assessment of Macroeconomic Implications

Citation Type: Miscellaneous

Publication Year: 2011

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Abstract: This paper quantitatively assesses wage dispersion and business cycle implications of the model presented by Tsuyuhara (201). In terms of frictional wage inequality,the results show that the model with on-the-job search with wage-tenure contracts seem to accommodate sizable frictional wage dispersion, but shows weak evidencethat the endogenous productivity diff erences due to work incentives are responsible for frictional wage dispersion. Moreover, the model predicts very small productivitydiff erences. In terms of business cycle implications, first, the mechanism of endogenous eff ort choice amplifi es the eff ect of productivity shock on unemployment rate.Second, the model illustrates a signifi cant diff erence between the eff ects of temporary productivity shock and that of permanent productivity shock due to the endogenousproductivity mechanism. Third, the model shows the importance of the distributional e ffect on macroeconomic variables during the transitory periods after a shock.

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Authors: Tsuyuhara, Kunio

Publisher: University of Calgary

Data Collections: IPUMS USA

Topics: Labor Force and Occupational Structure

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