TY  - GEN
AB  - This paper develops a search model with heterogeneous workers, rms, and on-the-job
search. Employed low-skilled workers are allowed to seek better paid jobs at high productivity
rms. Low productivity rms make take-it-or-leave-it wage oers, whereas high productivity
rms use Nash bargaining over wages. There are two important sources of ineciency in
the model besides the well-known classical search externality. First, low-skilled workers do
not have any bargaining power when they are employed at low productivity rms. Second,
the two types of workers are pooled in the same submarket. We demonstrate that lump-sum
transfers paid to workers can internalize these ineciencies. Moreover, both types of rms
may benet from the increase in the supply of low-skilled workers when the productivity
dierence in the two jobs for these workers is large, as a result the overall wage gap among
workers increase. On the contrary, when the productivity dierence is small, the eects
are reversed. Finally, both types of rms emerge in the equilibrium when rms are allowed
to open vacancies in both submarkets. On the one hand, it is attractive for rms to open
vacancies in the low productivity submarket since they pay low wages to workers. On the
other hand, it is also protable for rms to open vacancies in the high productivity submarket
because the probability of jobs being lled with low-skilled workers increase signicantly, even
though the bargained wages of high-skilled workers increase.
DA  - 2021
DO  - 10.4119/unibi/2950327
KW  - On-the-job search
KW  - Nash bargaining
KW  - take-it-or-leave-it
KW  - wage dispersion
LA  - eng
PY  - 2021
SN  - 2196-2723
SP  - 48-
TI  - Social Optimum, Heterogeneous Workers and Firms in the Labour Market with On-the-Job Search
UR  - https://nbn-resolving.org/urn:nbn:de:0070-pub-29503273
Y2  - 2024-11-22T01:02:00
ER  -