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Coordination in the Labor Market


  • Marja-Liisa Halko

    () (Department of Accounting and Finance, Aalto University School of Economics)

  • Juha Virrankoski

    () (Department of Economics, University of Turku)


We solve the equilibrium market structure in a labor market where vacancies and unemployed workers can meet either in an intermediated market where wages are determined by take-it-orleave- it offers, or in a directed search market where firms post wages. By using an intermediary agents avoid the coordination problem which prevails in the search market. We study a monopolistic intermediary and perfect competition between intermediaries, and we consider the welfare properties of an intermediary institution, compared to an economy with an uncoordinated search process only.

Suggested Citation

  • Marja-Liisa Halko & Juha Virrankoski, 2011. "Coordination in the Labor Market," Discussion Papers 64, Aboa Centre for Economics.
  • Handle: RePEc:tkk:dpaper:dp64

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    intermediary; matching; labor market;

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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