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Wage announcements with a continuum of worker type

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  • Kevin Lang
  • Michael Manove

Abstract

We present models of labor-market discrimination in which identical employers choose among job applicants according to a continuous characteristic such as skin color or worker height. The characteristic in question is assumed to be unrelated to worker productivity. Firms are required to announce wage offers that are not conditioned on the characteristic. Workers apply to firms on the basis of those announcements. Firms rank all applicants with respect to the characteristic and select the most desirable one. We show that in equilibrium all firms will offer the same wage, and workers will apply to each firm with equal probability. All employed workers will receive the same wage, but lower ranked workers will have a higher rate of unemployment than higher ranked workers and will thus have a lower expected income. These results differ from those of directed-search models characterized by a finite number of worker types.

Suggested Citation

  • Kevin Lang & Michael Manove, 2003. "Wage announcements with a continuum of worker type," Annals of Economics and Statistics, GENES, issue 71-72, pages 189-219.
    • Handle: RePEc:adr:anecst:y:2003:i:71-72:p:189-219
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    Cited by:

    1. BI, Sheng & LI, Yuanyuan, 2015. "Holdup and hiring discrimination with search friction," MPRA Paper 65100, University Library of Munich, Germany.
    2. Sheng Bi & Yuanyuan Li, 2016. "Holdup and hiring discrimination with search friction," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01277548, HAL.
    3. Sheng Bi & Yuanyuan Li, 2016. "Holdup and hiring discrimination with search friction," Documents de travail du Centre d'Economie de la Sorbonne 16002, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    4. Silvio Sticher, 2013. "Selection upon Wage Posting," Diskussionsschriften dp1311, Universitaet Bern, Departement Volkswirtschaft.
    5. Sheng Bi & Yuanyuan Li, 2016. "Holdup and hiring discrimination with search friction," Post-Print halshs-01277548, HAL.

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