Job Search with Bidder Memories
University of Leicester; Institute for the Study of Labor (IZA)
University of Essex - Department of Economics
University of Pennsylvania - Department of Economics; National Bureau of Economic Research (NBER)
July 1, 2009
PIER Working Paper No. 09-027
This paper revisits the no-recall assumption in job search models with take-it-or-leave-it offers. Workers who can recall previously encountered potential employers in order to engage them in Bertrand bidding have a distinct advantage over workers without such attachments. Firms account for this difference when hiring a worker. When a worker first meets a firm, the firm offers the worker a sufficient share of the match rents to avoid a bidding war in the future. The pair share the gains to trade. In this case, the Diamond paradox no longer holds.
Number of Pages in PDF File: 27
Keywords: Job search, recall, wage determination, Diamond paradox
JEL Classification: J24, J42, J64
Date posted: August 24, 2009
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