Bidding for Labor

Benoit Julien, John Kennes and Ian King

Review of Economic Dynamics, 2000, vol. 3, issue 4, 619-649

Abstract: We present a competing-auction theory of the labor market, where job candidates auction their labor services to employers. An equilibrium matching function emerges which has many of the features commonly assumed, including constant returns to scale in large economies. The auction mechanism also generates equilibrium wage dispersion among homogeneous workers and constrained-efficient entry of vacancies in large economies. In a dynamic version of the model, we generate implied numerical values for equilibrium unemployment and wage dispersion. The theory makes the novel prediction that wage dispersion is a decreasing function of the discount factor and labor market tightness. (Copyright: Elsevier)

Keywords: matching; wage dispersion; auctions; unemployment; efficiency (search for similar items in EconPapers)
JEL-codes: D44 E24 J31 J41 J64 (search for similar items in EconPapers)
Date: 2000
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Citations: View citations in EconPapers (177)

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Working Paper: Bidding for Labour (1998)
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DOI: 10.1006/redy.1999.0089

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