Incentives in competitive search equilibrium

Espen Moen () and Asa Rosen

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

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)
Pages: 45 pages
Date: 2007-11
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://eprints.lse.ac.uk/19663/ Open access version. (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:ehl:lserod:19663

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