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Wage Bargaining in a Multiple Application Search Model with Recall

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  • Lari Arthur Viianto

    () (Department of Economics and Finance, Universidad de Guanajuato)

Abstract

In this paper I extend the multiple application urn-ball game structure, introduced by Gautier and Moraga-Gonzalez (2004) and Albrecht, Gautier, and Vroman (2006), to an scenario where firms can, after a rejection, make additional wage offers. This expands the game structure from a one-shot set up to a sequential game. A firm, after being rejected by an applicant, can choose another applicant to make him a new wage o¤er. This possibility gives firms an outside option after a rejection. This increases the bargaining power of firms, implying a change in their wage offer behavior. The resulting wage distribution is hump-shaped with the density of wage offers concentrated on central values, rather than in extreme values.

Suggested Citation

  • Lari Arthur Viianto, 2010. "Wage Bargaining in a Multiple Application Search Model with Recall," Department of Economics and Finance Working Papers EC201001, Universidad de Guanajuato, Department of Economics and Finance.
  • Handle: RePEc:gua:wpaper:ec201001
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    References listed on IDEAS

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    1. Pissarides, C A, 1979. "Job Matchings with State Employment Agencies and Random Search," Economic Journal, Royal Economic Society, vol. 89(356), pages 818-833, December.
    2. James Albrecht & Pieter A. Gautier & Susan Vroman, 2006. "Equilibrium Directed Search with Multiple Applications," Review of Economic Studies, Oxford University Press, vol. 73(4), pages 869-891.
    3. Christopher A. Pissarides & Barbara Petrongolo, 2001. "Looking into the Black Box: A Survey of the Matching Function," Journal of Economic Literature, American Economic Association, vol. 39(2), pages 390-431, June.
    4. Olivier Jean Blanchard & Peter Diamond, 1994. "Ranking, Unemployment Duration, and Wages," Review of Economic Studies, Oxford University Press, vol. 61(3), pages 417-434.
    5. Hall, Robert E., 1979. "A theory of the natural unemployment rate and the duration of employment," Journal of Monetary Economics, Elsevier, vol. 5(2), pages 153-169, April.
    6. Marja-Liisa Halko & Klaus Kultti & and Juha Virrankoski, 2008. "Search Direction And Wage Dispersion," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 49(1), pages 111-134, February.
    7. James D. Montgomery, 1991. "Equilibrium Wage Dispersion and Interindustry Wage Differentials," The Quarterly Journal of Economics, Oxford University Press, vol. 106(1), pages 163-179.
    8. Gerard R. Butters, 1977. "Equilibrium Distributions of Sales and Advertising Prices," Review of Economic Studies, Oxford University Press, vol. 44(3), pages 465-491.
    9. Kevin Lang, 1991. "Persistent Wage Dispersion and Involuntary Unemployment," The Quarterly Journal of Economics, Oxford University Press, vol. 106(1), pages 181-202.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Matching; Labor Market; Multiple application; Wage distribution;

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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