Selection upon Wage Posting

Silvio Sticher

Diskussionsschriften from Universitaet Bern, Departement Volkswirtschaft

Abstract: We discuss a model of a job market where firms announce salaries. Thereupon, they decide through the evaluation of a productivity test whether to hire applicants. Candidates for a job are locked in once they have applied at a given employer. Hence, such a market exhibits a specific form of the bargain-then-ripoff principle. With a single firm, the outcome is efficient. Under competition, what might be called "positive selection" leads to market failure. Thus our model provides a rationale for very small employment probabilities in some sectors.

Keywords: directed search; selection; wage posting (search for similar items in EconPapers)
JEL-codes: D83 J21 J31 (search for similar items in EconPapers)
Date: 2013-11
New Economics Papers: this item is included in nep-lab and nep-lma
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