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Wage-Tenure Contracts, Experience and Employment Status

Carrillo-Tudela, C (2005) Wage-Tenure Contracts, Experience and Employment Status. UNSPECIFIED. Society for Economic Dynamics 2005 Meeting Papers, 110.

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The objective of this paper is to study equilibrium in a labour market with search frictions a la Burdett and Mortensen (1998). Identical firms post wage-contracts and ex-ante identical workers search for a job while unemployed and for a better one while employed. Although this situation has been analysed before, Stevens (2004) and Burdett and Coles (2003), the main novelty of this paper is to allow firms to offer contracts according to the worker's initial experience and employment status. We construct an equilibrium in which firms compete in 'promotion' contracts and offer unemployed workers longer 'probation'periods than to employed workers. An interesting feature of this equilibrium is that outside offers become more generous with experience. This generates workers cohort effects within a firm that depend on the level of experience at which they where hired. The distribution of earnings within the firm is then such that workers who have acquired more 'outside' firm experience and more tenure are higher in the earnings scale.

Item Type: Monograph (UNSPECIFIED)
Uncontrolled Keywords: Search; experience; contracts; promotion; dual labour markets; discrimination.
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculty of Social Sciences > Economics, Department of
Depositing User: Jim Jamieson
Date Deposited: 03 Jul 2012 15:45
Last Modified: 17 Aug 2017 18:11

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