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Working Effort and Endogenous Job Separations in Search Equilibrium

Author

Listed:
  • Anna Zaharieva (Chizhova)

    (Department of Economics, University of Konstanz, Germany)

Abstract

This paper considers job separations in a search model with labour market matching and moral hazard. Both workers and firms value productive matches and take actions to increase match stability: firms offer a share of match surplus to provide workers with correct incentives and workers take hidden actions (effort) negatively affecting the match separation rate. Heterogeneous productivity draws combined with the moral hazard problem give rise to match-specific endogenous separation rates. Additionally a counteraction of two effects - match stability and match scarcity - explains an observed asymmetric shape of a wage probability density function with a unique interior mode on the support.

Suggested Citation

  • Anna Zaharieva (Chizhova), 2010. "Working Effort and Endogenous Job Separations in Search Equilibrium," Working Paper Series of the Department of Economics, University of Konstanz 2010-06, Department of Economics, University of Konstanz.
  • Handle: RePEc:knz:dpteco:1006
    as

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    File URL: http://www.uni-konstanz.de/FuF/wiwi/workingpaperseries/WP_Zaharieva-6-10.pdf
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    References listed on IDEAS

    as
    1. repec:hal:spmain:info:hdl:2441/c8dmi8nm4pdjkuc9g8grh35j2 is not listed on IDEAS
    2. Fabien Postel-Vinay & Jean-Marc Robin, 2002. "Equilibrium Wage Dispersion with Worker and Employer Heterogeneity," Econometrica, Econometric Society, vol. 70(6), pages 2295-2350, November.
    3. repec:hal:spmain:info:hdl:2441/dc0ckec3fcb29ms985085gkbp is not listed on IDEAS
    4. Fabien Postel-Vinay & Jean-Marc Robin, 2002. "Equilibrium Wage Dispersion with Worker and Employer Heterogeneity," Post-Print hal-03458567, HAL.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Dennis Wesselbaum, 2013. "Reciprocity and matching frictions," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 60(3), pages 247-268, September.
    2. Stupnytska, Yuliia, 2015. "Asymmetric information in a search model with social contacts," Center for Mathematical Economics Working Papers 548, Center for Mathematical Economics, Bielefeld University.
    3. Chris Martin & Bingsong Wang, 2018. "Search Frictions, Efficiency Wages and Equilibrium Unemployment," Review of Economic Analysis, Digital Initiatives at the University of Waterloo Library, vol. 10(1), pages 45-54, January.

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    More about this item

    Keywords

    Matching; separation rate; job stability; effort; wage density;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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