Social and Behavioral Sciences Commons^™

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 …