Involuntary unemployment and worker self-selection
Consider a firm that lacks information about the reservation wage or ability of any specific worker, but is aware that workers with higher reservation wages tend to be more able, on average. We show that under a simple condition - that the efficiency wage exceeds the lowest reservation wage - the optimal hiring policy for the firm involves (1) no wage discrimination, and (2) rationing of jobs, when demand for its product is low. The result also extends to the case where hours of work are variable, provided each worker is most productive when working a strictly positive number of hours per week.
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- A Competitive Efficiency Wage Model with Keynesian Features
- scientific article; zbMATH DE number 4029228 (Why is no real title available?)
- scientific article; zbMATH DE number 7088117 (Why is no real title available?)
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