Job Search, Bargaining, and Wage Dynamics

37 Pages Posted: 19 Nov 2006 Last revised: 29 Jan 2010

See all articles by Shintaro Yamaguchi

Shintaro Yamaguchi

University of Tokyo - Graduate School of Economics

Date Written: January 25, 2010


This paper constructs and estimates a model of wage bargaining with on-the-job search to explore three different components of wages: general human capital, match-specific capital, and outside options. As the workers find better job opportunities, the current employer has to compete with outside firms to retain them. This between-firm competition results in wage growth even when productivity remains the same. The model is estimated by a simulated minimum distance estimator and data from the NLSY79. The results indicate that the improved value of the outside option raises wages by 14-16% in the first five years.

Keywords: Search, Matching, Age-earnings profile, Structural Estimation

JEL Classification: J31, J63, J64

Suggested Citation

Yamaguchi, Shintaro, Job Search, Bargaining, and Wage Dynamics (January 25, 2010). Available at SSRN: or

Shintaro Yamaguchi (Contact Author)

University of Tokyo - Graduate School of Economics ( email )


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