Fixed or Flexible? Wage-setting in Search Equilibrium

Why do some vacancies offer a posted wage whereas others offer a negotiable wage? The paper endogenizes the choice of wage policy in a standard sequential search model with heterogeneous workers. In particular, we identify circumstances such that there exists an equilibrium in which all firms negoti...

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Veröffentlicht in:	Economica (London) 2003-05, Vol.70 (278), p.233-250
Hauptverfasser:	Ellingsen, Tore, Rosén, ÅSa
Format:	Artikel
Sprache:	eng
Schlagworte:	Economic models Economics Employment Equilibrium Job hunting Labor market equilibrium Labor markets Labour market Market equilibrium Nash equilibrium Productivity Studies Unemployment Wage policy Wage rates Wages
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Beschreibung
Zusammenfassung:	Why do some vacancies offer a posted wage whereas others offer a negotiable wage? The paper endogenizes the choice of wage policy in a standard sequential search model with heterogeneous workers. In particular, we identify circumstances such that there exists an equilibrium in which all firms negotiate wages. We find that this equilibrium exists if and only if the labour market is sufficiently tight and worker heterogeneity is sufficiently large.
ISSN:	0013-0427 1468-0335
DOI:	10.1111/1468-0335.t01-1-00281