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 show that a minimum wage can have large effects throughout the earnings distribution,using a combination of theory and empirical evidence. To this end, we develop an equilibriumsearch model featuring empirically relevant worker and firm heterogeneity. We usethe estimated model to evaluate a...

We quantify the effect of a minimum wage on compression throughout the earnings distribution. Using the case of Brazil, which experienced a large decrease in earnings inequality while its real minimum wage increased from 1996-2012, we document that the inequality decrease was bottom-driven yet...

We document that a large share of the gender pay gap in Brazil is due to women working at lower-paying employers. At the same time, women's revealed-preference ranking of employers is less increasing in pay compared to that of men. To interpret these facts, we develop an empirical equilibrium...

We study the distributional effects of a monetary policy-induced firm-level credit supply shock on individual wages and employment. To this end, we construct a novel dataset that links worker employment histories to firms' bank credit relationships in Germany. We document that firms in...