This paper uses ideas developed recently in models of equilibrium search to consider the participation decision of workers who have different preferences for leisure. The matching process is random, the production process deterministic, and wages are determined by a Nash bargain among participants. In steady-state equilibrium, the number of participants is inefficient due to externalities resulting from private decisions. A condition for efficient worker participation is derived which turns out also to be the condition for efficient firm entry. Copyright 1987 by The Review of Economic Studies Limited.
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Article provided by London School of Economics and Political Science in its journal Economica.
Volume (Year): 54 (1987) Issue (Month): 215 (August) Pages: 325-33 Download reference. The following formats are available: HTML
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