Ranking, Unemployment Duration, and Wages
61 Pages Posted: 26 Jul 2001 Last revised: 5 Oct 2022
Date Written: June 1990
Abstract
Firms often receive multiple acceptable applications for vacancies, requiring a choice among candidates. This paper contrasts equilibria when firms select workers at random and when firms select the worker with the shortest spell of unemployment, called ranking. With the filling of vacancies unaffected by the selection rule, both equilibria have the same aggregate dynamics, but different distributions of unemployment durations. With the threat point for the Nash bargained wage being a worker with zero unemployment duration, the wage with ranking is much more sensitive to changes in the tightness of the labor market. The same holds for efficiency wages.
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Optimal Unemployment Insurance in Search Equilibrium
By Peter Fredriksson and Bertil Holmlund
-
A Theory of the Natural Unemployment Rate and the Duration of Employment
-
Employed and Unemployed Job Search: a Comparison of Choices and Outcomes Among Youth
-
Job Matching, Social Network and Word-of-Mouth Communication
By Antoni Calvo-armengol and Yves Zenou
-
Job Matching, Social Network and Word-of-Mouth Communication
By Antoni Calvo-armengol and Yves Zenou
-
Density, Social Networks and Job Search Methods: Theory and Application to Egypt
By Jackline Wahba and Yves Zenou