Incentives in Competitive Search Equilibrium

Espen Moen () and Åsa Rosén

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: This paper analyses the interaction between internal agency problems within firms and external search frictions when workers have private information. We show that the allocation of resources is determined by a modified Hosios Rule. We then analyze the effect of changes in the macro economic variables on the wage contract and the unemployment rate. We find that private information may increase the responsiveness of the unemployment rate to changes in productivity. The incentive power of the wage contracts is positively related to high productivity, low unemployment benefits and high search frictions.

Keywords: Private information; incentives; search; unemployment; wage rigidity (search for similar items in EconPapers)
JEL-codes: E30 J30 J60 (search for similar items in EconPapers)
Date: 2007-11
New Economics Papers: this item is included in nep-bec and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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https://cep.lse.ac.uk/pubs/download/dp0832.pdf (application/pdf)

Related works:
Journal Article: Incentives in Competitive Search Equilibrium (2011)
Working Paper: Incentives in competitive search equilibrium (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:cep:cepdps:dp0832

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