Journal Article

No. 2007-13 | November 13, 2007 (Version 2: October 01, 2008)
Ekkehart Schlicht
Wage Dispersion, Over-Qualification, and Reder Competition PDF Icon

Abstract

The expansion of higher education in the Western countries has been accompanied by a marked widening of wage differentials and increasing over-qualification. While the increase in wage differentials has been attributed to skill-biased technological change that made advanced skills scarce, this explanation does not fit well with the observed increase in over-qualification which suggests that advanced skills are in excess supply. By “Reder-competition” I refer to the simultaneous adjustment of wage offers and hiring standards in response to changing labor market conditions. I present a simple model of Reder competition that depicts wages as driven by labor heterogeneity, rather than scarcity. The mechanism may give rise to a simultaneous increase in wage differentials and over-qualification.

Data Set

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JEL Classification

D43 J31 J63

Versions

Citation

Ekkehart Schlicht (2007). Wage Dispersion, Over-Qualification, and Reder Competition. Economics: The Open-Access, Open-Assessment E-Journal, Vol. 1, 2007-13 (Version 2) . http://dx.doi.org/10.5018/economics-ejournal.ja.2007-13

Assessment

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Ekkehart Schlicht - Revision Report
October 01, 2008 - 10:59

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