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Changing Workerfs States and Inefficient Decisions on Turnover


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  • Keisuke Kawata

    (Graduate School of Economics, Osaka University)


This paper considers an on-the-job search model that includes wage bargaining and employer-employee mismatch. There are two states of workers in relationship to their fit for a particular job, good match versus bad match (mismatch). These states change in accordance with a stochastic process. There are two main results; the first is that the turnover level that workers find optimal is lower than the socially optimal level. The second is that the level of the firmfs entry is not optimal even though the Hosios condition is hold. The first result is clearly distinct from previous studies.

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Bibliographic Info

Paper provided by Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP) in its series Discussion Papers in Economics and Business with number 09-37.

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Length: 34 pages
Date of creation: Nov 2009
Date of revision:
Handle: RePEc:osk:wpaper:0937

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Keywords: on-the-job search; wage bargaining; mismatch; turnover;

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