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Hiring Standards and Market Clearing

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  • Schlicht, Ekkehart

    ()
    (University of Munich)

Abstract

Consider a labour market with heterogeneous workers. Firms recruit workers by fixing a hiring standard and a wage offer simultaneously. A more demanding hiring standard necessitates a better wage offer in order to attract enough qualified applicants. As a result, an efficiency wage effect is obtained. An equilibrium emerges which does not clear the labour market. The wage level depends on structural characteristics of labour supply, such as heterogeneity and mobility of the workers. The model is contrasted with prevailing efficiency wage theories, and policy implications are also discussed.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 481.

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Length: 23 pages
Date of creation: Apr 2002
Date of revision:
Handle: RePEc:iza:izadps:dp481

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Keywords: hiring standards; efficiency wages; wage formation; unemployment;

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References

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  1. Solow, Robert M., 1979. "Another possible source of wage stickiness," Journal of Macroeconomics, Elsevier, vol. 1(1), pages 79-82.
  2. Stiglitz, Joseph E, 1974. "Alternative Theories of Wage Determination and Unemployment in LDC'S: The Labor Turnover Model," The Quarterly Journal of Economics, MIT Press, vol. 88(2), pages 194-227, May.
  3. Garcia, Gillian, 1972. "Olech's theorem and the dynamic stability of theories of the rate of interest," Journal of Economic Theory, Elsevier, vol. 4(3), pages 541-544, June.
  4. Salop, Steven C, 1979. "A Model of the Natural Rate of Unemployment," American Economic Review, American Economic Association, vol. 69(1), pages 117-25, March.
  5. Schlicht, Ekkehart, 1978. "Labour Turnover, Wage Structure, and Natural Unemployment," Munich Reprints in Economics 1255, University of Munich, Department of Economics.
  6. Stiglitz, Joseph E, 1987. "The Causes and Consequences of the Dependence of Quality on Price," Journal of Economic Literature, American Economic Association, vol. 25(1), pages 1-48, March.
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Citations

RePEc Biblio mentions

As found on the RePEc Biblio, the curated bibliography for Economics:
  1. > Labor Economics > Efficiency wages
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Cited by:
  1. Meyer, Wolfgang & Gerlach, Knut, 2005. "Zusammenlegung von Arbeitslosen- und Sozialhilfe: Wirkungen auf Löhne, Beschäftigung und gewerkschaftliche Tarifpolitik (The merging of uneployment assistance and social aissistance * effects on wag," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 38(2/3), pages 383-395.
  2. Knut Gerlach & Gesine Stephan, 2006. "Bargaining Regimes and Wage Dispersion," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 226(6), pages 629-645, November.
  3. Ludsteck, Johannes & Haupt, Harry, 2007. "An Empirical Test of Reder Competition and Specific Human Capital Against Standard Wage Competition," Discussion Papers in Economics 1977, University of Munich, Department of Economics.
  4. Ludsteck, Johannes & Haupt, Harald, 2007. "An Empirical Test of the Reder Hypothesis," Discussion Papers in Economics 1397, University of Munich, Department of Economics.
  5. Gerlach, Knut & Stephan, Gesine, 2005. "Wage distributions by wage-setting regime," IAB Discussion Paper 200509, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  6. repec:iab:iabzaf:v:38:i:2/3:p:383-395 is not listed on IDEAS

Lists

This item is featured on the following reading lists or Wikipedia pages:
  1. Effektivitetsløn in Wikipedia (Danish)
  2. Efficiency wage in Wikipedia (English)

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