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Wage-Vacancy Contracts And Coordination Frictions, Nicolas L. Jacquet, Serene Tan
Wage-Vacancy Contracts And Coordination Frictions, Nicolas L. Jacquet, Serene Tan
Research Collection School Of Economics
We consider a directed search model with risk-averse workers and risk-neutral entrepreneurs who can set up firms that post wage-vacancy contracts, i.e., contracts where firms can make payments to more than one applicant, and where the payments can be different for each applicant and be contingent on the number of applicants. We establish that the type of contracts the literature focuses on are not offered if firms can post wage-vacancy contracts. We show that there exists an equilibrium satisfying a Monotonic Expected Utility property which is efficient. Furthermore, we investigate the role of wage-vacancy contracts on welfare and competition.
Labor Hoarding Contracts And Coordination Fictions, Nicolas L. Jacquet, Serene Tan
Labor Hoarding Contracts And Coordination Fictions, Nicolas L. Jacquet, Serene Tan
Research Collection School Of Economics
This paper considers a directed search model with risk-neutral firms and risk-averse workers. Although each firm has only one job to fill, firms can hire as many workers as they wish, and the wage a worker is paid can be contingent on the queue length at the firm and his position in the queue. We first show that, contrary to standard directed search models, the application subgame does not necessarily have a unique symmetric solution; although uniqueness is guaranteed if all firms post Flat-Wage Contracts (FWCs), i.e., contracts where firms commit to employ a fixed number of workers at a …