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http://hdl.handle.net/10419/58497
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| Title: | | Selective hiring and welfare analysis in labor market models  |
| Authors: | | Merkl, Christian van Rens, Thijs |
| Issue Date: | | 2012 |
| Series/Report no.: | | Discussion Paper series, Forschungsinstitut zur Zukunft der Arbeit 6294 |
| Abstract: | | Firms select not only how many, but also which workers to hire. Yet, in standard search models of the labor market, all workers have the same probability of being hired. We argue that selective hiring crucially affects welfare analysis. Our model is isomorphic to a search model under random hiring but allows for selective hiring. With selective hiring, the positive predictions of the model change very little, but the welfare costs of unemployment are much larger because unemployment risk is distributed unequally across workers. As a result, optimal unemployment insurance may be higher and welfare is lower if hiring is selective. |
| Subjects: | | labor market models welfare optimal unemployment insurance |
| JEL: | | E24 J65 |
| Persistent Identifier of the first edition: | | urn:nbn:de:101:1-201203145670 |
| Document Type: | | Working Paper |
| Appears in Collections: | | Publikationen von Forscherinnen und Forschern des IfW Economists Online IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)
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