Lump-sum transfers could bridge wage gap and boost firm profits.
The study looks at how different types of workers and companies interact in the job market. They found that low-skilled workers can benefit from moving to higher-paying jobs at more productive companies. By giving workers lump-sum payments, the system can work more efficiently. When there is a big difference in productivity between jobs, the wage gap between workers can increase. But when the productivity difference is small, the effects are reversed. Companies can benefit from opening job vacancies in both low and high productivity markets. Low productivity firms pay lower wages, while high productivity firms have a better chance of hiring low-skilled workers.