TY - JOUR
T1 - Directed search on the job and the wage ladder
AU - Delacroix, Alain
AU - Shi, Shouyong
PY - 2006/5
Y1 - 2006/5
N2 - We model a labor market where employed workers search on the job and firms direct workers' search using wage offers and employment probabilities. Applicants observe all offers and face a trade-off between wage and employment probability. There is wage dispersion among workers, even though all workers and jobs are homogeneous. Equilibrium wages form a ladder, as workers optimally choose to climb the ladder one rung at a time. This is because low-wage applicants are relatively more sensitive to employment probability than to wage and thus forgo the opportunity to apply for a high wage, with a lower chance of success.
AB - We model a labor market where employed workers search on the job and firms direct workers' search using wage offers and employment probabilities. Applicants observe all offers and face a trade-off between wage and employment probability. There is wage dispersion among workers, even though all workers and jobs are homogeneous. Equilibrium wages form a ladder, as workers optimally choose to climb the ladder one rung at a time. This is because low-wage applicants are relatively more sensitive to employment probability than to wage and thus forgo the opportunity to apply for a high wage, with a lower chance of success.
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U2 - 10.1111/j.1468-2354.2006.00392.x
DO - 10.1111/j.1468-2354.2006.00392.x
M3 - Article
AN - SCOPUS:33645702751
SN - 0020-6598
VL - 47
SP - 651
EP - 699
JO - International Economic Review
JF - International Economic Review
IS - 2
ER -