Research Repository

An Equilibrium Search Model with Optimal Wage-Experience Contract

Carrillo Tudela, CO (2009) 'An Equilibrium Search Model with Optimal Wage-Experience Contract.' Review of Economic Dynamics, 12 (1). pp. 108-128. ISSN 1094-2025

Full text not available from this repository.

Abstract

The objective of this paper is to study equilibrium in a labour market, in which workers search on the job and firms offer wage contracts conditional upon workers' experience and employment status. In this environment, the optimal contract can be described by a promotion contract. The distribution of contract offers is dispersed within and across experience levels. As workers stay longer in the market and promotion dates get closer, the option value of holding a job increases. Firms offer early promotions to attract more experienced workers. A positive relation between experience and earnings can arise purely from firms' optimal response to labour market competition brought about by workers' on-the-job search. We characterise the offer distribution for each experience level and show how these change with labour market conditions. © 2008 Elsevier Inc. All rights reserved.

Item Type: Article
Uncontrolled Keywords: Search; Wage dispersion; Experience; Contracts
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculty of Social Sciences
Faculty of Social Sciences > Economics, Department of
SWORD Depositor: Elements
Depositing User: Elements
Date Deposited: 03 Jul 2012 16:23
Last Modified: 15 Jan 2022 00:51
URI: http://repository.essex.ac.uk/id/eprint/2734

Actions (login required)

View Item View Item