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Efficiency Of Wage Bargaining With On‐The‐Job Search

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  • Xiaoming Cai

Abstract

This article studies efficiency in a general class of search models where both unemployed and employed workers search for better jobs and can meet multiple firms simultaneously. Employers can respond to outside offers and wages are a weighted average of the productivities of the current employer and a credible poaching firm. I derive a condition that balances firms' bargaining power and their meeting externality. This condition ensures efficiency of both worker turnover and firm entry. Finally, the efficiency condition unifies and extends many of the results on the efficiency of equilibrium search models.

Suggested Citation

  • Xiaoming Cai, 2020. "Efficiency Of Wage Bargaining With On‐The‐Job Search," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 61(4), pages 1749-1775, November.
    • Handle: RePEc:wly:iecrev:v:61:y:2020:i:4:p:1749-1775
    DOI: 10.1111/iere.12478
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    Cited by:

    1. Roberto Bonilla & Alberto Trejos, 2021. "Marriage and employment participation with wage bargaining in search equilibrium," Scottish Journal of Political Economy, Scottish Economic Society, vol. 68(4), pages 517-533, September.
    2. Damdinsuren, Erdenebulgan & Zaharieva, Anna, 2023. "Expectation formation and learning in the labour market with on-the-job search and Nash bargaining," Labour Economics, Elsevier, vol. 81(C).
    3. Peltonen, Juho, 2023. "On the efficiency of labor markets with short-time work policies," MPRA Paper 119165, University Library of Munich, Germany.

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