Wage Dispersion and Search Behavior: The Importance of Non-Wage Job Values

We use a rich new body of data on the experiences of unemployed jobseekers to determine the sources of wage dispersion and to create a search model consistent with the acceptance decisions the jobseekers made. Heterogeneity in non-wage job values or amenities among jobseekers and jobs is a central feature of our model. From the data and the model, we identify the distributions of four key variables: offered wages, offered non-wage job values, the value of the jobseeker’s non-work alternative, and the jobseeker’s personal productivity. We find that, conditional on personal productivity, the standard deviation of offered log-wages is moderate, at 0.24, whereas the dispersion of the non-wage component of offered job values is substantially larger, at 0.34. The resulting dispersion of offered job values is 0.38. We also find high dispersion of personal productivity, at 0.43.