Hiring Standards and Market Clearing

Ekkehart Schlicht

No 481, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Consider a labour market with heterogeneous workers. Firms recruit workers by fixing a hiring standard and a wage offer simultaneously. A more demanding hiring standard necessitates a better wage offer in order to attract enough qualified applicants. As a result, an efficiency wage effect is obtained. An equilibrium emerges which does not clear the labour market. The wage level depends on structural characteristics of labour supply, such as heterogeneity and mobility of the workers. The model is contrasted with prevailing efficiency wage theories, and policy implications are also discussed.

Keywords: hiring standards; efficiency wages; wage formation; unemployment (search for similar items in EconPapers)
JEL-codes: J31 J41 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2002-04
New Economics Papers: this item is included in nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Published - final version published as 'Hiring Standards and Labor Market Clearing' in: Metroeconomica, 2005, 56(2), 263-279

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Journal Article: HIRING STANDARDS AND LABOUR MARKET CLEARING (2005)
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