We develop a model of a frictional labor market with idiosyncratic and aggregate shocks, sticky wages, and two-sided lack of commitment between workers and firms. In this environment, wages are allocative in the sense that inefficient job separations arise when the wage-to-productivity ratio...

This background material elucidates the role of between- and within-employer pay differences in explaining the level and trends of earnings inequality for a range of countries. Some policy implications are discussed

We study the nature of firm pay dynamics using matched employer-employee and firm financials data from Sweden. To this end, we propose and estimate a statistical model that extends the seminal framework by Abowd, Kramarz, and Margolis (1999b) to account for idiosyncratically time-varying firm...

We study the nature of firm pay dynamics. To this end, we propose a statistical model that extends the seminal framework by Abowd, Kramarz and Margolis (1999) to allow for idiosyncratically time-varying firm pay policies. We estimate the model using linked employer-employee data for Sweden from...

This paper studies earnings inequality and dynamics in Argentina between 1996 and 2015. Following the 2001–2002 crisis, the Argentine economy transitioned from a low‐ to a high‐inflation regime, while collective bargaining and the minimum wage gained influence. This transition was...