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Raiding Opportunities and Unemployment

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Author Info
Tranaes, Torben

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Abstract

This article studies the impact of raiding opportunities in a labor market in which worker abilities differ. Recruiting firms can either raid an elsewhere-employed worker of known ability by bidding up his wage or go through costly search to find a good worker among the unemployed. In equilibrium, all types of workers experience unemployment, high-ability workers involuntarily. The raiding opportunities give rise to involuntary unemployment without changing the basic properties of the competitive model and thus suggest new implications of various institutional parameters on unemployment, in particular, unemployment compensation, minimum wages, wage taxation, and search requirements. Copyright 2001 by University of Chicago Press.

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Publisher Info
Article provided by University of Chicago Press in its journal Journal of Labor Economics.

Volume (Year): 19 (2001)
Issue (Month): 4 (October)
Pages: 773-98
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Handle: RePEc:ucp:jlabec:v:19:y:2001:i:4:p:773-98

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  1. Damiano, Ettore & Li, Hao & Suen, Wing, 2006. "Competing for Talents," Micro Theory Working Papers damiano-06-01-17-02-01-48, Microeconomics.ca Website, revised 17 Jan 2006. [Downloadable!]
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  2. Fredriksson, Peter & Holmlund, Bertil, 2003. "Improving Incentives in Unemployment Insurance: A Review of Recent Research," Working Paper Series 2003:10, Uppsala University, Department of Economics. [Downloadable!]
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  3. Tricia Gladden & Michelle Alexopoulos, 2004. "The Effects of Wealth, and Unemployment Benefits on Search Behavior and Labor Market Transitions," Econometric Society 2004 North American Summer Meetings 517, Econometric Society. [Downloadable!]
  4. Francis Kiraly, 2003. "On Employment Contracts with Heterogeneous Workers and Endogenous On-the-job Search," Keele Economics Research Papers KERP 2003/04, Centre for Economic Research, Keele University, revised Jan 2004. [Downloadable!]
  5. Eriksson, Stefan & Gottfries, Nils, 2000. "Ranking of job applicants, on-the-job search, and persistent unemployment," Working Paper Series 2000:8, IFAU - Institute for Labour Market Policy Evaluation. [Downloadable!]
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