Competing for Talent

52 Pages Posted: 30 Jan 2018 Last revised: 16 Mar 2018

See all articles by Yuhta Ishii

Yuhta Ishii

Centro de Investigación Económica, ITAM

Aniko Oery

Yale University - Cowles Foundation

Adrien Vigier

University of Oxford - Department of Economics

Date Written: January 29, 2018

Abstract

In many labor markets, e.g., for lawyers, consultants, MBA students, and professional sport players, workers get offered and sign long-term contracts even though waiting could reveal significant information about their capabilities. This phenomenon is called unraveling. We examine the link between wage bargaining and unraveling. Two firms, an incumbent and an entrant, compete to hire a worker of unknown talent. Informational frictions prevent the incumbent from always observing the entrant’s arrival, inducing unraveling in all equilibria. We analyze the extent of unraveling, surplus shares, the average talent of employed workers, and the distribution of wages within and across firms.

Keywords: Unraveling, Talent, Wage Bargaining, Competition, Uncertainty

JEL Classification: C7, D8, J3

Suggested Citation

Ishii, Yuhta and Oery, Aniko and Vigier, Adrien, Competing for Talent (January 29, 2018). Cowles Foundation Discussion Paper No. 2119. Available at SSRN: https://ssrn.com/abstract=3112837 or http://dx.doi.org/10.2139/ssrn.3112837

Yuhta Ishii

Centro de Investigación Económica, ITAM ( email )

Camino a Santa Teresa No. 930
Col. Héroes de Padierna
Ciudad de México
Mexico

Aniko Oery (Contact Author)

Yale University - Cowles Foundation ( email )

Box 208281
New Haven, CT 06520-8281
United States

Adrien Vigier

University of Oxford - Department of Economics ( email )

Manor Road Building
Manor Road
Oxford, OX1 3BJ
United Kingdom

Register to save articles to
your library

Register

Paper statistics

Downloads
146
Abstract Views
844
rank
206,252
PlumX Metrics