Ranking, Unemployment Duration, and Wages
This paper examines the effects of the composition of unemployment on wage determination. It explores the implication of one central assumption: firms hire the worker who has been unemployed for the least amount of time. By embodying this assumption in a model of the labor market with job creation/destruction and matching, the joint behavior of unemployment, the distribution of unemployment durations, and wages are characterized. The implication that the reemployment prospects of employed workers, were they to become unemployed, are better than those of the currently unemployed appears to have been an important feature of European unemployment experience in the 1980s. Copyright 1994 by The Review of Economic Studies Limited.
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Volume (Year): 61 (1994)
Issue (Month): 3 (July)
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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Olivier Jean Blanchard, 1989. "Two Tools for Analyzing Unemployment," NBER Working Papers 3168, National Bureau of Economic Research, Inc.
- Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-44, June.
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- Holzer, Harry J & Katz, Lawrence F & Krueger, Alan B, 1991. "Job Queues and Wages," The Quarterly Journal of Economics, MIT Press, vol. 106(3), pages 739-68, August.
- Oliver Jean Blanchard & Peter Diamond, 1989. "The Beveridge Curve," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 20(1), pages 1-76.
- Blanchard, J.O., 1989.
"The Aggregate Matching Function,"
538, Massachusetts Institute of Technology (MIT), Department of Economics.
- Calvo, Guillermo, 1979. "Quasi-Walrasian Theories of Unemployment," American Economic Review, American Economic Association, vol. 69(2), pages 102-07, May.
- Barron, John M & Bishop, John, 1985. "Extensive Search, Intensive Search, and Hiring Costs: New Evidence on Employer Hiring Activity," Economic Inquiry, Western Economic Association International, vol. 23(3), pages 363-82, July.
- Avner Shaked & John Sutton, 1984. "The Semi-Walrasian Economy," STICERD - Theoretical Economics Paper Series 98, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
- Diamond, Peter A, 1982. "Wage Determination and Efficiency in Search Equilibrium," Review of Economic Studies, Wiley Blackwell, vol. 49(2), pages 217-27, April.
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