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A NOTE ON WAGE DETERMINATION UNDER MISMATCH

Published online by Cambridge University Press:  15 April 2014

William B. Hawkins
William B. Hawkins*
Affiliation:
Yeshiva University
*
Address correspondence to: William Hawkins, Department of Economics, Yeshiva University, 245 Lexington Avenue (LX711), New York, NY 10016, USA; e-mail: [email protected].
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Abstract

Shimer (Mismatch, American Economic Review 97, 1074–1101 [2007]) introduced a model of mismatch in which limited mobility of vacant jobs and unemployed workers provides a microfoundation for their coexistence in equilibrium. He assumed that the short side of a local labor market receives all the gains from trade. In this note I show that modifying this assumption on wage-setting can deliver more reasonable predictions for wages at the level of the local market and in the aggregate.

Keywords

Mismatch UnemploymentWage DeterminationShapley Value
Type
Notes
Information
Macroeconomic Dynamics , Volume 19 , Issue 8 , December 2015 , pp. 1866 - 1879
Copyright
Copyright © Cambridge University Press 2014 

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