Main Research Interests:
Macroeconomics
Further Research Interests:
Labor Economics
Job Market Paper
Unemployment History and Frictional Wage Dispersion
Abstract (New version)
This paper studies wage dispersion among identical workers in a random matching search model in which workers lose human capital during unemployment. Wage dispersion increases, as workers accept lower wages to avoid long unemployment spells. The model is an important improvement over baseline search models. It explains between a third and half of the observed residual wage dispersion. When adding on-the-job search, the model accounts for all of the residual wage dispersion and generates substantial dispersion even for high values of non-market time. The paper thus addresses the trade-off between explaining frictional wage dispersion and the cyclical behavior of unemployment.
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Work in Progress
Human Capital Losses during Unemployment and Fiscal Policy
Contact
Victor Ortego-Marti
Department of Economics
London School of Economics
Houghton Street
London WC2A 2AE
Email: v.ortego-marti@lse.ac.uk