Working Effort and Endogenous Job Separations in Search Equilibrium

Anna Zaharieva

No 2010-06, Working Paper Series of the Department of Economics, University of Konstanz from Department of Economics, University of Konstanz

Abstract: This paper considers job separations in a search model with labour market matching and moral hazard. Both workers and firms value productive matches and take actions to increase match stability: firms offer a share of match surplus to provide workers with correct incentives and workers take hidden actions (effort) negatively affecting the match separation rate. Heterogeneous productivity draws combined with the moral hazard problem give rise to match-specific endogenous separation rates. Additionally a counteraction of two effects - match stability and match scarcity - explains an observed asymmetric shape of a wage probability density function with a unique interior mode on the support.

Keywords: Matching; separation rate; job stability; effort; wage density (search for similar items in EconPapers)
JEL-codes: J31 J63 J64 M52 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2010-10-11
New Economics Papers: this item is included in nep-cta, nep-dge and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:knz:dpteco:1006

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