Carrillo Tudela, CO (2009) An Equilibrium Search Model with Optimal Wage-Experience Contract. Review of Economic Dynamics, 12 (1). pp. 108-128. DOI https://doi.org/10.1016/j.red.2008.02.001
Carrillo Tudela, CO (2009) An Equilibrium Search Model with Optimal Wage-Experience Contract. Review of Economic Dynamics, 12 (1). pp. 108-128. DOI https://doi.org/10.1016/j.red.2008.02.001
Carrillo Tudela, CO (2009) An Equilibrium Search Model with Optimal Wage-Experience Contract. Review of Economic Dynamics, 12 (1). pp. 108-128. DOI https://doi.org/10.1016/j.red.2008.02.001
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 |
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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: | Unnamed user with email elements@essex.ac.uk |
Depositing User: | Unnamed user with email elements@essex.ac.uk |
Date Deposited: | 03 Jul 2012 16:23 |
Last Modified: | 30 Oct 2024 17:34 |
URI: | http://repository.essex.ac.uk/id/eprint/2734 |