NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Pricing of Job Characteristics When Markets Do Not Clear: Theory and Implications

Kevin Lang, Sumon Majumdar

NBER Working Paper No. 9911
Issued in August 2003
NBER Program(s):   LS

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.

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Document Object Identifier (DOI): 10.3386/w9911

Published: Lang, Kavin and Sumon Majumdar. "The Pricing Of Job Characteristics When Markets Do Not Clear: Theory And Policy Implications," International Economic Review, 2004, v45(4,Nov), 1111-1128.

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