Worker Mobility in a Search Model with Adverse Selection

Carlos Carrillo-Tudela and Leo Kaas

No 9367, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We analyze the effects of adverse selection on worker turnover and wage dynamics in a frictional labor market. We consider a model of on-the-job search where firms offer promotion wage contracts to workers of different abilities, which is unknown to firms at the hiring stage. With sufficiently strong information frictions, low-wage firms offer separating contracts and hire all types of workers in equilibrium, whereas high-wage firms offer pooling contracts, promoting high-ability workers only. Low-ability workers have higher turnover rates and are more often employed in low-wage firms. The model replicates the negative relationship between job-to-job transitions and wages observed in the U.S. labor market.

Keywords: worker mobility; on-the-job search; adverse selection; wage dynamics (search for similar items in EconPapers)
JEL-codes: D82 J63 J64 (search for similar items in EconPapers)
Pages: 66 pages
Date: 2015-09
New Economics Papers: this item is included in nep-dge, nep-hrm and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Published - published in: Journal of Economic Theory, 2015, 160, 340 - 386.

Downloads: (external link)
https://docs.iza.org/dp9367.pdf (application/pdf)

Related works:
Journal Article: Worker mobility in a search model with adverse selection (2015)
Working Paper: Worker Mobility in a Search Model with Adverse Selection (2015)
Working Paper: Worker Mobility in a Search Model with Adverse Selection (2015)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp9367

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().