Incentives in Competitive Search Equilibrium and Wage Rigidity

Espen Moen (espen.r.moen@bi.no) and Rosén, Åsa
Authors registered in the RePEc Author Service: Åsa Rosén

No 5554, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper examines competitive search equilibrium when workers' effort choice and 'type' are private information. We derive a modified Hosios Rule determining the allocation of resources, and analyze how private information influences the responsiveness of the unemployment rate to changes in macroeconomic variables. Most importantly, private information increases the responsiveness of the unemployment rate to changes in the general (type- and effort independent) productivity level. If the changes also affect the information structure, the responsiveness of the unemployment rate may be large, even if the changes in expected productivity are small.

Keywords: Private information; Search; Unemployment; Wage rigidity (search for similar items in EconPapers)
JEL-codes: E30 J30 J60 (search for similar items in EconPapers)
Date: 2006-03
New Economics Papers: this item is included in nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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