Journal of Labor Economics Vol. 20 No. 1 2002
Between Search and Walras
Abstract
We present a model in which unemployed workers simultaneously sample n potential employers. By varying n, we nest search and Walrasian‐type models of the labor market. We show that low values of n yield typical search equilibria: the wages are dispersed below the marginal productivity of labor. Interestingly, as n exceeds a relatively small threshold, the Walrasian‐type equilibrium emerges with the competitive wage quoted by all firms. For intermediate values of n, the equilibrium is a hybrid of the Walrasian and search equilibria. The model generates wage rigidity and yields novel predictions regarding the comovement of wages, firm turnover, and unemployment.
- DOI
- 10.1086/323932
- Volume
- 20
- Issue
- 1
- Pages
- 59-85
- Language
- en
- Sources
- openalex crossref