We develop a general equilibrium model in which firms employ different types of labor. Firms are endowed with market power that allows them to be price-makers and wage-setters. First, firms face upward sloping labor supplies because idiosyncratic non-pecuniary conditions interact with wages in workers’ decisions to work for specific firms. Second, we pin down the existence of a double exploitation of labor whose intensity depends on the interaction between the product and labor markets. Third, the heterogeneity within each type of labor implies that the high-productive workers tend to be overpaid, whereas the low-productive workers would be underpaid. However, intensifying competition on the goods market shrinks the discrepancy between wages and workers’ productivity. Last, we offer a theory of differential discrimination in which gender pay inequality varies with women’s family status.

April 13, 2015 (Monday) 13:30-15:00

Institute of Developing Economies, Japan External Trade Organization C21 Meeting Room 　

Jacques-François Thisse (The Center for Operations Research and Econometrics, Université catholique de Louvain(CORE UCL), Professor）

English

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