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Title:Hiring Standards and Market Clearing PDF Logo
Authors:Schlicht, Ekkehart
Issue Date:2002
Series/Report no.:IZA Discussion paper series 481
Abstract:Consider a labour market with heterogeneous workers. Firms recruit workers by fixing a hiring standard and a wage offer simultaneously. A more demanding hiring standard necessitates a better wage offer in order to attract enough qualified applicants. As a result, an efficiency wage effect is obtained. An equilibrium emerges which does not clear the labour market. The wage level depends on structural characteristics of labour supply, such as heterogeneity and mobility of the workers. The model is contrasted with prevailing efficiency wage theories, and policy implications are also discussed.
Subjects:wage formation
hiring standards
efficiency wages
unemployment
JEL:J41
J31
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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