Template-Type: ReDIF-Paper 1.0
Series: Tinbergen Institute Discussion Papers
Creation-Date: 2000-04-12
Number: 00-028/1
Author-Name: Maarten C.W. Janssen
Author-Email: janssen@few.eur.nl
Author-Workplace-Name: Erasmus University Rotterdam
Title: Catching Hipo's: Screening, Wages and Unemployment
Abstract: In this paper, I study the wage a firm sets to attract high abilityworkers (hipo's) in situationsof unemployment. I show that the higher unemployment, the larger afirm's incentives to sorthigh and low ability workers. Moreover, workers will signal their(high) ability in situationsof (high) unemployment only if a job offers a high enough wage. Themain result, therefore,says that a firm sets higher wages, the higher unemployment. As themodel is applicable tothe upper segment of the labour market, the result is in line withthe empirical fact thatincome inequality increases when more people are unemployed.
Classification-JEL: C72; D82; J42
Keywords: Monopsony Power; Labor Market; Screening
File-Url: https://papers.tinbergen.nl/00028.pdf
File-Format: application/pdf
File-Size: 74972 bytes
Handle: RePEc:tin:wpaper:20000028