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Does digitalization increase labor market efficiency? Job search and effort on the job with asymmetric information and firm learning

Karin Mayr-Dorn ()

No 2019-06, Economics working papers from Department of Economics, Johannes Kepler University Linz, Austria

Abstract: This paper analyses the effect of firm learning on labor market efficiency in a frictional labor market with asymmetric information. I consider a model with random matching and wage bargaining a la Pissarides (1985, 2000) where worker ability is unknown to firms at the hiring stage. Firm learning increases relative expected earnings in high-ability jobs and, thereby, enhances imitation incentives of low-ability workers. The net effect on aggregate expected match surplus and unemployment is indeterminate a priori. Numerical results show that firm learning does not increase labor market efficiency.

Keywords: job search; on-the-job effort; asymmetric information; learning. (search for similar items in EconPapers)
JEL-codes: D82 D83 J64 (search for similar items in EconPapers)
Date: 2019-03
New Economics Papers: this item is included in nep-bec, nep-dge and nep-lab
Note: English
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