Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/95020
Authors: 
Schager, Nils Henrik
Year of Publication: 
1988
Series/Report no.: 
IUI Working Paper 200
Abstract: 
The present paper has two aims. The first one concerns primarily an issue of method. I set up and analyse an explicitly stochastic model of the optimal behaviour of a firm, which recruits from a search labour market. The second aim of my paper concerns very much an issue of substance in economics. I show that when the firm is not allowed to decrease its money wage, its optimal response to lower unemployment is to increase its wage, if a plausible (and testable) condition with regard to its expected horizon is met. Hence search theory predicts the existence of a micro Phillips relation under plausible assumptions.
Subjects: 
Wage rigidity
job search
phillips curve
optimal firm behaviour
JEL: 
J23
J31
J62
Document Type: 
Working Paper

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