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Unobserved heterogeneity, exit rates and re-employment wages
Fernández-Blanco, Javier (Universitat Autònoma de Barcelona)
Gomes, Pedro (Universidad Carlos III de Madrid)

Date: 2017
Abstract: Exit rates from unemployment and re-employment wages decline over a period of unemployment, after controlling for worker observable characteristics. We study the role of unobserved heterogeneity in an economy with asymmetric information and directed search. We show that the unique equilibrium is separating and that skilled workers have more job opportunities and higher wages. The composition of the unemployed varies with the duration of unemployment, so average exit rates and wages fall with time. The separating equilibrium relies on performance-related pay schemes and the ability of firms to commit to renting an input that is complementary to worker skills.
Grants: Ministerio de Ciencia y Tecnología ECO2010-19357
Ministerio de Ciencia y Tecnología EC02013-46395
Ministerio de Economía y Competitividad ECO2012-32392
Rights: Tots els drets reservats.
Language: Anglès
Document: Article ; recerca ; Versió acceptada per publicar
Subject: Asymmetric information ; Directed search ; Unemployment duration
Published in: The Scandinavian journal of economics, Vol. 119, Num. 2 (2017) , p. 375-404, ISSN 0347-0520

DOI: 10.1111/sjoe.12173


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 Record created 2018-10-16, last modified 2022-01-22



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