Worker mobility in a search model with adverse selection

Carrillo-Tudela, Carlos; Kaas, Leo

Worker mobility in a search model with adverse selection

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Date

2015

Authors

Carrillo-Tudela, Carlos

Kaas, Leo

DOI (citable link)

10.1016/j.jet.2015.10.003

Collections

Wirtschaftswissenschaften

Publication type

Journal article

Publication status

Published

Published in

Journal of Economic Theory ; 160 (2015). - pp. 340-386. - ISSN 0022-0531. - eISSN 1095-7235

Abstract

We analyze the effects of adverse selection on worker turnover and wage dynamics in a frictional labor market. We consider a model of on-the-job search where firms offer promotion wage contracts to workers of different abilities, which is unknown to firms at the hiring stage. With sufficiently strong information frictions, low-wage firms offer separating contracts and hire all types of workers in equilibrium, whereas high-wage firms offer pooling contracts, promoting high-ability workers only. Low-ability workers have higher turnover rates and are more often employed in low-wage firms. The model replicates the negative relationship between job-to-job transitions and wages observed in the U.S. labor market.

Subject (DDC)

330 Economics

Keywords

Adverse selection; On-the-job search; Worker mobility; Wage dynamics

Cite This

ISO 690

CARRILLO-TUDELA, Carlos, Leo KAAS, 2015. Worker mobility in a search model with adverse selection. In: Journal of Economic Theory. 160, pp. 340-386. ISSN 0022-0531. eISSN 1095-7235. Available under: doi: 10.1016/j.jet.2015.10.003

BibTex

@article{CarrilloTudela2015Worke-32734,
  year={2015},
  doi={10.1016/j.jet.2015.10.003},
  title={Worker mobility in a search model with adverse selection},
  volume={160},
  issn={0022-0531},
  journal={Journal of Economic Theory},
  pages={340--386},
  author={Carrillo-Tudela, Carlos and Kaas, Leo}
}

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Bibliography of Konstanz

Yes