We present a model in which unemployed workers simultaneously sample n potential employers. By varying n, we nest search and Walrasian-type models of the labor market. We show that low values of n yield typical search equilibria: the wages are dispersed below the marginal productivity of labor. Interestingly, as n exceeds a relatively small threshold, the Walrasian-type equilibrium emerges with the competitive wage quoted by all firms. For intermediate values of n, the equilibrium is a hybrid of the Walrasian and search equilibria. The model generates wage rigidity and yields novel predictions regarding the comovement of wages, firm turnover, and unemployment.
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Volume (Year): 20 (2002) Issue (Month): 1 (January) Pages: 59-85 Download reference. The following formats are available: HTML
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Handle: RePEc:ucp:jlabec:v:20:y:2002:i:1:p:59-85
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