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Working Effort and Endogenous Job Separations in Search Equilibrium

  • Anna Zaharieva (Chizhova)

    ()

    (Department of Economics, University of Konstanz, Germany)

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.

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Paper provided by Department of Economics, University of Konstanz in its series Working Paper Series of the Department of Economics, University of Konstanz with number 2010-06.

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Length: 40 pages
Date of creation: 11 Oct 2010
Date of revision:
Handle: RePEc:knz:dpteco:1006
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