A Search Version of the Roy Model

Michael Sattinger

Discussion Papers from University at Albany, SUNY, Department of Economics

Abstract: This paper considers the decisions of workers to search in different labor markets, in analogy to Roy¡¯s model of sectoral selection. In the basic model, a worker can search in one labor market or another but not both. With non-pecuniary benefits, a worker chooses the labor market offering the highest reservation utility level. Conditions for simultaneous search in two markets are also derived under the assumption that workers suffer a reduction in wage offers. Decisions of where to search are relevant to self-selection into sectors and self-selection biases, the formation of interview networks, and generation of overlapping markets.

Date: 2003
New Economics Papers: this item is included in nep-lab
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