... index associated with the cutoff wage. For i ≥ ρ (1) , defineδ 1 (i)=Prob{w 1 =˜wi| w 1 ≥ w 1 } =µinh=ρ (1) µh.Thenγ2(j)=Prob{w2=˜wj| w 1 ≥ w 1 } =ni=ρ (1) P 1 (i, j) δ 1 (i) .For ... =θ−∞θdFθ|m0,σ2 1 + 1 1 −β−β 1 −β∞θθdFθ|m0,σ2 1 . (6.6 .10 )Adding equation (6.6 .10 ) to (6.6.9) givesθ − m0=β 1 −β∞θθ− θdFθ|m0,σ2 1 . (6.6 .11 )The right ... (6.6 .14 ), (6.6 .15 ), and(6.6 .16 ) to write a single functional equation in V ,V (m0)=maxm0+ βmaxθ 1 −β,βV (m 1 )dGm 1 |µ, K0σ20dF (θ|m0,σ2 1 ),βV (m 1 )dGm 1 |µ,...