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Raiding Opportunities and Unemployment

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  • Tranaes, Torben

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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Bibliographic 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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Web page: http://www.journals.uchicago.edu/JOLE/

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Cited by:
  1. Eriksson, Stefan & Gottfries, Nils, 2005. "Ranking of job applicants, on-the-job search, and persistent unemployment," Labour Economics, Elsevier, vol. 12(3), pages 407-428, June.
  2. Peter Fredriksson & Bertil Holmlund, 2006. "Improving Incentives in Unemployment Insurance: A Review of Recent Research," Journal of Economic Surveys, Wiley Blackwell, vol. 20(3), pages 357-386, 07.
  3. Oyer, Paul & Schaefer, Scott, 2011. "Personnel Economics: Hiring and Incentives," Handbook of Labor Economics, Elsevier.
  4. Damiano, Ettore & Li, Hao & Suen, Wing, 2012. "Competing for talents," Journal of Economic Theory, Elsevier, vol. 147(6), pages 2190-2219.
  5. 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.

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