Catching Hipo's: Screening, Wages and Unemployment
AbstractIn this paper, I study the wage a firm sets to attract high abilityworkers (hipo's) in situationsof unemployment. I show that the higher unemployment, the larger afirm's incentives to sorthigh and low ability workers. Moreover, workers will signal their(high) ability in situationsof (high) unemployment only if a job offers a high enough wage. Themain result, therefore,says that a firm sets higher wages, the higher unemployment. As themodel is applicable tothe upper segment of the labour market, the result is in line withthe empirical fact thatincome inequality increases when more people are unemployed.
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Bibliographic InfoPaper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 00-028/1.
Date of creation: 12 Apr 2000
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Monopsony Power; Labor Market; Screening;
Find related papers by JEL classification:
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
This paper has been announced in the following NEP Reports:
- NEP-ALL-2000-06-29 (All new papers)
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