Search Results

Using NLSY79, the first chapter shows that return to training is higher in small than in large establishments. This new empirical finding is not explained by the existing theories which are based on competitive assumptions. An equilibrium search model is constructed to interpret this empirical regularity. With suitable parameters, the model generates an equilibrium characterized by wage dispersion and one in which (1) large firms pay more to their workers, (2) they train a higher proportion of their workers, and (3) wage return to training is lower in large firms.

The second chapter analyzes the determinants of wage growth for blacks and whites and decomposes the difference in their growth rates. The average difference in black-white wage growth can be almost entirely attributed to the differences in endowments, with pre-market factors---schooling and AFQT---explaining two-thirds and general labor market experience accounting for another third of the differential. The role of labor market discrimination appears to be small.

Chapter three discusses changes in black-white inequality in relation to establishment size. Important aspects of the employment relationship are examined, including job initiation, fringe benefits, on-the-job training, wages, and job separations. The chapter shows that overall racial discrimination in the U.S. labor market does not diminish as establishment size increases, except in the case of hiring. In addition, relative preferential treatment for blacks in terms of hiring is solely responsible for the overrepresentation of blacks in large establishments.

The last chapter summarizes main findings in the dissertation in the unifying framework of equilibrium search theory. It is argued that perfect competition assumptions do not accord with the U.S. labor market well and search is an effective alternative to model the decentralized market.