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Wage Dynamics, Sorting Patterns in Labour Markets and Policy Evaluation

Objective

WASP is aimed at developing realistic empirical equilibrium search models of the labour market, with heterogeneous agents and long-term self-enforcing contracts, that
• Can help better understand rent sharing mechanisms in labour markets, • Allow for multiple sources of productivity dynamics, including deterministic human capital accumulation and idiosyncratic productivity shocks, • Do not rule out sorting by assumption, nor the possibility of mismatch – as in perfectly competitive Beckerian marriage models, • Can fit linked employer-employee data in all three dimensions: across workers, firms and time, • Can be used for policy evaluation.

These research questions will be addressed within six different sub-projects:
1. Understanding tenure effects. Human capital accumulation and productivity shocks are introduced in a search-matching framework to explain the difference between tenure and experience effects.
2. Employment protection policies, wage dynamics and sorting. A search-matching model with productivity shocks is estimated on worker data and used to discuss the optimal design of employment protection policies.
3. Large firms, sorting and linked employer-employee data. Firms post more than one job offer. The model permits the use of linked employer-employee data for estimation.
4. Risk-aversion, savings and risk sharing. Risk-averse workers, subject to productivity shocks, are matched with risk-neutral employers. The model is used to measure the relative importance of self-insurance vis-à-vis insurance provided by the employer.
5. Unemployment, wage inequality and business cycle. Allowing for aggregate productivity shocks in a search-matching model with worker heterogeneity can explain the unemployment volatility puzzle and the effect of business cycles on the wage distribution.
6. Marriage, search and welfare policy. The intra-household resource allocation process is endogenised in a search model of marriage.
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Principal Investigator

Jean-Marc Robin (Prof.)

Host institution

FONDATION NATIONALE DES SCIENCES POLITIQUES

Address

Rue Saint Guillaume 27
75337 Paris

France

Activity type

Higher or Secondary Education Establishments

EU Contribution

€ 1 340 494

Principal Investigator

Jean-Marc Robin (Prof.)

Administrative Contact

Amélie Antoine Audo (Ms.)

Beneficiaries (2)

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FONDATION NATIONALE DES SCIENCES POLITIQUES

France

EU Contribution

€ 1 340 494

UNIVERSITY COLLEGE LONDON

United Kingdom

EU Contribution

€ 469 026

Project information

Grant agreement ID: 269693

Status

Closed project

  • Start date

    1 May 2011

  • End date

    31 December 2016

Funded under:

FP7-IDEAS-ERC

  • Overall budget:

    € 1 809 520

  • EU contribution

    € 1 809 520

Hosted by:

FONDATION NATIONALE DES SCIENCES POLITIQUES

France