Carrillo-Tudela, Carlos and Kaas, Leo (2015) Worker mobility in a search model with adverse selection. Journal of Economic Theory, 160 (C). pp. 340-386. DOI https://doi.org/10.1016/j.jet.2015.10.003
Carrillo-Tudela, Carlos and Kaas, Leo (2015) Worker mobility in a search model with adverse selection. Journal of Economic Theory, 160 (C). pp. 340-386. DOI https://doi.org/10.1016/j.jet.2015.10.003
Carrillo-Tudela, Carlos and Kaas, Leo (2015) Worker mobility in a search model with adverse selection. Journal of Economic Theory, 160 (C). pp. 340-386. DOI https://doi.org/10.1016/j.jet.2015.10.003
Abstract
We analyze the effects of adverse selection on worker turnover and wage dynamics in a frictional labor market. We consider a model of on-the-job search where firms offer promotion wage contracts to workers of different abilities, which is unknown to firms at the hiring stage. With sufficiently strong information frictions, low-wage firms offer separating contracts and hire all types of workers in equilibrium, whereas high-wage firms offer pooling contracts, promoting high-ability workers only. Low-ability workers have higher turnover rates and are more often employed in low-wage firms. The model replicates the negative relationship between job-to-job transitions and wages observed in the U.S. labor market.
Item Type: | Article |
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Additional Information: | Source info: IZA Discussion Paper No. 9367 |
Uncontrolled Keywords: | Adverse selection; On-the-job search; Worker mobility; Wage dynamics |
Subjects: | H Social Sciences > HB Economic Theory |
Divisions: | Faculty of Social Sciences Faculty of Social Sciences > Economics, Department of |
SWORD Depositor: | Unnamed user with email elements@essex.ac.uk |
Depositing User: | Unnamed user with email elements@essex.ac.uk |
Date Deposited: | 09 Jan 2016 17:29 |
Last Modified: | 30 Oct 2024 17:34 |
URI: | http://repository.essex.ac.uk/id/eprint/15794 |
Available files
Filename: WP-40.pdf