Job Search Costs And Incentives
The costs of searching for a job vacancy are typically associated with fric- tion that deters or delays employment of potentially productive individuals. We demonstrate that in a labor market with moral hazard where effort is non- contractible, job search costs play a positive role, whose effect may outweigh the negative implications. As workers are provided incentives to exert effort by the threat of losing their job and having to search for a new vacancy, a reduction in job search costs leads to fewer employees willing to exert effort. The overall lower productivity will make more individuals and firms opting to stay out of the labor market, resulting in lower employment and decreased welfare. Eventually, a reduction of jobs search costs below a certain level results in collapse of the labor market.
|Date of creation:||2013|
|Contact details of provider:|| Postal: P.O.B 653, Beer-Sheva 8410501|
Web page: http://www.bgu.ac.il/econ
More information through EDIRC
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.:
- Peter Fredriksson & Bertil Holmlund, 2006.
"Improving Incentives in Unemployment Insurance: A Review of Recent Research,"
Journal of Economic Surveys,
Wiley Blackwell, vol. 20(3), pages 357-386, 07.
- Fredriksson, Peter & Holmlund, Bertil, 2003. "Improving incentives in unemployment insurance: A review of recent research," Working Paper Series 2003:5, IFAU - Institute for Evaluation of Labour Market and Education Policy.
- Fredriksson, Peter & Holmlund, Bertil, 2003. "Improving Incentives in Unemployment Insurance: A Review of Recent Research," Working Paper Series 2003:10, Uppsala University, Department of Economics.
- Peter Fredriksson & Bertil Holmlund, 2003. "Improving Incentives in Unemployment Insurance: A Review of Recent Research," CESifo Working Paper Series 922, CESifo Group Munich.
- Olivier Blanchard, 2004.
"The Economic Future of Europe,"
Journal of Economic Perspectives,
American Economic Association, vol. 18(4), pages 3-26, Fall.
- Manning, Alan, 2009. "You can't always get what you want: The impact of the UK Jobseeker's Allowance," Labour Economics, Elsevier, vol. 16(3), pages 239-250, June.
- Daron Acemoglu & Robert Shimer, 1999.
"Productivity Gains from Unemployment Insurance,"
NBER Working Papers
7352, National Bureau of Economic Research, Inc.
- Dale T. Mortensen, 1982.
"The Matching Process as a Noncooperative Bargaining Game,"
in: The Economics of Information and Uncertainty, pages 233-258
National Bureau of Economic Research, Inc.
- Dale T. Mortensen, 1979. "The Matching Process as a Non-Cooperative/Bargaining Game," Discussion Papers 384, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Demougin, Dominique & Helm, Carsten, 2011. "Job matching when employment contracts suffer from moral hazard," European Economic Review, Elsevier, vol. 55(7), pages 964-979.
- Pries, Michael & Rogerson, Richard, 2009. "Search frictions and labor market participation," European Economic Review, Elsevier, vol. 53(5), pages 568-587, July.
- Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-444, June.
When requesting a correction, please mention this item's handle: RePEc:bgu:wpaper:1307. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Aamer Abu-Qarn)
If references are entirely missing, you can add them using this form.