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Abstract

This paper explores how interviews affect the matching process when worker productivity is private information. Wages are determined by a single round of strategic bargaining after the worker is interviewed. The implications of this hiring process for the efficiency of matching and the incidence and severity of statistical discrimination are considered. The better are firms at identifying productive workers the worse the average quality of the unemployment pool so interviewing tends to slow down matching for every one. Multiple Pareto rankable equilibria are possible such that any social group in a "bad" equilibrium faces stricter hiring standards, longer spells of unemployment and lower welfare.

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File URL: http://www.sciencedirect.com/science/article/B6V85-4TY9MJW-5/2/4b59f71e1c1b7191742d2a3b770a814a
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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Dynamics and Control.

Volume (Year): 33 (2009)
Issue (Month): 4 (April)
Pages: 938-954

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Handle: RePEc:eee:dyncon:v:33:y:2009:i:4:p:938-954

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Web page: http://www.elsevier.com/locate/jedc

Related research

Keywords: Search Private information Statistical discrimination Unemployment;

References

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1. Christopher A. Pissarides, 2000. "Equilibrium Unemployment Theory, 2nd Edition," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262161877.
2. Smith, Eric & Wright, Randall, 1992. "Why Is Automobile Insurance in Philadelphia So Damn Expensive?," American Economic Review, American Economic Association, vol. 82(4), pages 756-72, September.
   
   • Smith, E. & Wright, R., 1990. "Why Is Automobile Insurance In Philadelphia So Damn Expensive?," Working Papers e-90-4, Hoover Institution, Stanford University.
   • Eric Smith & Randall Wright, 1991. "Why is automobile insurance in Philadelphia so damn expensive?," Staff Report 139, Federal Reserve Bank of Minneapolis.
3. David H. Autor & David Scarborough, 2008. "Does Job Testing Harm Minority Workers? Evidence from Retail Establishments," The Quarterly Journal of Economics, MIT Press, vol. 123(1), pages 219-277, 02.
4. Stephen Morris & Hyun Song Shin, 2002. "Social Value of Public Information," American Economic Review, American Economic Association, vol. 92(5), pages 1521-1534, December.
5. Barbara Petrongolo & Christopher A. Pissarides, 2000. "Looking Into the Black Box: A Survey of the Matching Function," CEP Discussion Papers dp0470, Centre for Economic Performance, LSE.
   
   • Christopher A. Pissarides & Barbara Petrongolo, 2001. "Looking into the Black Box: A Survey of the Matching Function," Journal of Economic Literature, American Economic Association, vol. 39(2), pages 390-431, June.
   • Petrongolo, Barbara & Pissarides, Christopher, 2000. "Looking Into The Black Box: A Survey Of The Matching Function," CEPR Discussion Papers 2409, C.E.P.R. Discussion Papers.
6. Blanchard, O.J. & Diamond, P., 1990. "Ranking, Unemployment Duration, And Wages," Working papers 546, Massachusetts Institute of Technology (MIT), Department of Economics.
   
   • Blanchard, Olivier Jean & Diamond, Peter A, 1994. "Ranking, Unemployment Duration, and Wages," Review of Economic Studies, Wiley Blackwell, vol. 61(3), pages 417-34, July.
   • Olivier Jean Blanchard & Peter Diamond, 1990. "Ranking, Unemployment Duration, and Wages," NBER Working Papers 3387, National Bureau of Economic Research, Inc.
7. Williamson, Steve & Wright, Randall, 1994. "Barter and Monetary Exchange under Private Information," American Economic Review, American Economic Association, vol. 84(1), pages 104-23, March.
   
   • Williamson, S. & Wright, R., 1991. "Barter and Monetary Exchange Under Private Information," University of Western Ontario, The Centre for the Study of International Economic Relations Working Papers 9107, University of Western Ontario, The Centre for the Study of International Economic Relations.
   • Steve Williamson & Randall Wright, 1991. "Barter and monetary exchange under private information," Staff Report 141, Federal Reserve Bank of Minneapolis.
8. Malcomson, James M., 1999. "Individual employment contracts," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 35, pages 2291-2372 Elsevier.
   
   • Malcomson, J., 1998. "Individual employment contracts," Discussion Paper Series In Economics And Econometrics 9804, Economics Division, School of Social Sciences, University of Southampton.
9. Burdett, Ken & Coles, Melvyn G, 1997. "Marriage and Class," The Quarterly Journal of Economics, MIT Press, vol. 112(1), pages 141-68, February.
10. Larry Samuelson & George J. Mailath & Avner Shaked, 2000. "Endogenous Inequality in Integrated Labor Markets with Two-Sided Search," American Economic Review, American Economic Association, vol. 90(1), pages 46-72, March.
    
    • George J. Mailath & Larry Samuelson & Avner Shaked, . "Endogenous Inequality in Integrated Labor Markets with Two-sided Search," Penn CARESS Working Papers 90ff654ed11b714e3f7530c57, Penn Economics Department.
    • George J. Mailath & Larry Samuelson & Avner Shaked, . ""Endogenous Inequality in Integrated Labor Markets with Two-sided Search''," CARESS Working Papres 98-06, University of Pennsylvania Center for Analytic Research and Economics in the Social Sciences.
11. Paul R. Milgrom, 1979. "Good Nevs and Bad News: Representation Theorems and Applications," Discussion Papers 407R, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    
    • Paul R. Milgrom, 1981. "Good News and Bad News: Representation Theorems and Applications," Bell Journal of Economics, The RAND Corporation, vol. 12(2), pages 380-391, Autumn.
12. repec:aea:jeclit:v:43:y:2005:i:4:p:959-988 is not listed on IDEAS
13. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-44, June.
14. Chade, Hector, 2006. "Matching with noise and the acceptance curse," Journal of Economic Theory, Elsevier, vol. 129(1), pages 81-113, July.

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Citations

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Cited by:

1. Åsa Rosén & Steinar Holden, 2009. "Discrimination and Employment Protection," 2009 Meeting Papers 350, Society for Economic Dynamics.
   
   • Holden, Steinar & Rosén, Åsa, 2009. "Discrimination and Employment Protection," Memorandum 22/2009, Oslo University, Department of Economics.
   • Steinar Holden & Asa Rosen, 2009. "Discrimination and Employment Protection," CESifo Working Paper Series 2822, CESifo Group Munich.
2. Siegel, Ron & Ely, Jeffrey C., 0. "Adverse selection and unraveling in common-value labor markets," Theoretical Economics, Econometric Society.

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