Changing Worker fs States and Inefficient Decisions on Turnover

Keisuke Kawata

No 09-37, Discussion Papers in Economics and Business from Osaka University, Graduate School of Economics

Abstract: This paper considers an on-the-job search model that includes wage bargaining and employer-employee mismatch. There are two states of workers in relationship to their fit for a particular job, good match versus bad match (mismatch). These states change in accordance with a stochastic process. There are two main results; the first is that the turnover level that workers find optimal is lower than the socially optimal level. The second is that the level of the firm fs entry is not optimal even though the Hosios condition is hold. The first result is clearly distinct from previous studies.

Keywords: on-the-job search; wage bargaining; mismatch; turnover (search for similar items in EconPapers)
JEL-codes: J63 J81 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2009-11
New Economics Papers: this item is included in nep-dge and nep-lab
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Persistent link: https://EconPapers.repec.org/RePEc:osk:wpaper:0937

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