Resource title

On-the-job search and sorting

Resource image

image for OpenScout resource :: On-the-job search and sorting

Resource description

We characterize the equilibrium of a search model with a continuum of job and worker types, wage bargaining, free entry of vacancies and on-the-job search. The decentralized economy with monopsonistic wage setting yields too many vacancies and hence too low unemployment compared to first best. This is due to a business-stealing externality. Raising workers? bargaining power resolves this inefficiency. Unemployment benefits are a second best alternative to this policy. We establish simple relations between the losses in production due to search frictions and wage differentials on the one hand and unemployment on the other hand. Both can be used for empirical testing.

Resource author

Pieter A. Gautier, Coen N. Teulings, Aico van Vuuren

Resource publisher

Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/19001

Resource license

Adapt according to the presented license agreement and reference the original author.