Going the Extra Mile: Effort by Workers and Job-Seekers
Matthias Hertweck (),
Vivien Lewis () and
Stefania Villa ()
No 1277, Temi di discussione (Economic working papers) from Bank of Italy, Economic Research and International Relations Area
We introduce two types of effort into an otherwise standard labor search model to examine equilibrium determinacy. Indeterminacy occurs when wages rise sharply in response to a labor market tightening. Variable labor effort gives rise to short-run increasing returns to hours in production. This raises workers’ marginal product and wages, expanding the region of indeterminacy. Variable search effort makes workers search more intensively in a tighter labor market, which limits the rise in wages and shrinks the region of indeterminacy. Indeterminacy disappears completely when vacancy posting costs are replaced with hiring costs.
Keywords: Determinacy; Effort; Hours; Labor; Search intensity (search for similar items in EconPapers)
JEL-codes: E23 E24 E32 E64 E71 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge and nep-mac
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Journal Article: Going the Extra Mile: Effort by Workers and Job‐Seekers (2021)
Working Paper: Going the extra mile: Effort by workers and job-seekers (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:bdi:wptemi:td_1277_20
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