The Assignment of Workers to Jobs in an Economy with Coordination Frictions
AbstractThis paper studies the assignment of heterogeneous workers to heterogeneous jobs in the presence of coordination frictions. Firms offer human-capital-contingent wages, workers observe these and apply for a job. In a symmetric equilibrium, identical workers use identical mixed strategies in deciding where to apply, and the randomness introduced by mixed strategies generates equilibrium unemployment and vacancies. The equilibrium can be interpreted as the competitive equilibrium of a closely related model, ensuring constrained efficiency. The model generates a rich interaction between the heterogeneous workers and firms. Firms attract applications from multiple types of workers, and earn higher profits when they hire a more productive worker. Identical workers apply for jobs with different productivity and get higher wages when they land a more productive job. Despite this mismatch, I show that in some special cases, the model generates assortative matching, with a positive correlation between matched workers' and firms' productivity.
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Bibliographic InfoArticle provided by University of Chicago Press in its journal Journal of Political Economy.
Volume (Year): 113 (2005)
Issue (Month): 5 (October)
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Web page: http://www.journals.uchicago.edu/JPE/
Other versions of this item:
- Robert Shimer, 2001. "The Assignment of Workers to Jobs In an Economy with Coordination Frictions," NBER Working Papers 8501, National Bureau of Economic Research, Inc.
- E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
- J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
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