Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/282476 
Authors: 
Year of Publication: 
2023
Series/Report no.: 
CESifo Working Paper No. 10788
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
This paper assesses wage setting and wage dynamics in a search and matching framework where (i) workers and firms on occasion meet multilaterally; (ii) workers can recall previous encounters with firms; and (iii) firms cannot commit to future wages and workers cannot commit to not searching on the job. The resulting progression of wages (from firms paying just enough to keep their workers) yields a compensation structure consistent with well established but difficult to reconcile observations on pay dynamics within jobs at firms. Along with wage tenure effects, serial correlation in wage changes and wage growth are negatively correlated with initial wages.
Subjects: 
wage dynamics
stock-flow matching
on-the-job search
no commitment
JEL: 
J31
J63
J64
Document Type: 
Working Paper
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