Wage Offers and On-the-job Search

Tristan Potter and Dan Bernhardt

No 2018-7, School of Economics Working Paper Series from LeBow College of Business, Drexel University

Abstract: We study the wage-setting problem of an employer with private information about demand for its product when workers can engage in costly on-the-job search. Employers understand that low wage offers may convey bad news that induces workers to search. The unique perfect sequential equilibrium wage strategy is characterized by: (i) pooling by intermediate-revenue employers on a common wage that just deters search; (ii) discontinuously lower revealing offers by low-revenue employers for whom the benefit of deterring search fails to warrant the required high pooling wage; and (iii) high revealing offers by high-revenue employers seeking to deter aggressive poachers.

Keywords: Wage offers; on-the-job search; signaling (search for similar items in EconPapers)
JEL-codes: D82 J30 M54 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2018-09-13, Revised 2018-10-14
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Journal Article: Wage offers and on‐the‐job search (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:ris:drxlwp:2018_007

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