Job Search with Bidder Memories

28 Pages Posted: 4 Aug 2009

See all articles by Carlos Carrillo-Tudela

Carlos Carrillo-Tudela

University of Leicester; IZA Institute of Labor Economics

Guido Menzio

University of Pennsylvania - Department of Economics; National Bureau of Economic Research (NBER)

Eric Smith

University of Essex - Department of Economics

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Abstract

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.

Keywords: job search, recall, wage determination, Diamond paradox

JEL Classification: J24, J42, J64

Suggested Citation

Carrillo-Tudela, Carlos and Menzio, Guido and Smith, Eric, Job Search with Bidder Memories. IZA Discussion Paper No. 4319. Available at SSRN: https://ssrn.com/abstract=1442614

Carlos Carrillo-Tudela (Contact Author)

University of Leicester ( email )

University Road
Leicester, LE1 7RH
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Guido Menzio

University of Pennsylvania - Department of Economics ( email )

Ronald O. Perelman Center for Political Science
133 South 36th Street
Philadelphia, PA 19104-6297
United States
215-898-5170 (Phone)

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Eric Smith

University of Essex - Department of Economics ( email )

Wivenhoe Park
Colchester CO4 3SQ
United Kingdom

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