We empirically establish that one-third of job transitions leads to wage
losses. Using a quantitative on-the-job search model, we find that
60 percent of them are movements down the job ladder. Accounting
for them, our baseline calibration matches the large residual wage
inequality in US data while attributing only 13.7 percent of overall
wage inequality to the presence of search frictions in the labor
market. We can trace the difference between ours and previous much
higher estimates to our explicit modeling of nonvalue improving
Tjaden, Volker, and Felix Wellschmied.
"Quantifying the Contribution of Search to Wage Inequality."
American Economic Journal: Macroeconomics,
Human Capital; Skills; Occupational Choice; Labor Productivity
Wage Level and Structure; Wage Differentials
Unemployment: Models, Duration, Incidence, and Job Search