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Job matching and the distribution of producer surplus

Bertola, G. and Felli, Leonardo (1993) Job matching and the distribution of producer surplus. Ricerche Economiche, 47 (1). pp. 65-92. ISSN 0035-5054

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Identification Number: 10.1016/0035-5054(93)90025-X


We study wage determination in the Jovanovic model of matching, relaxing the standard assumption that wages continuously adjust to reflect on-the-job performance and studying aggregation of ex-ante heterogeneous career paths. We assume that workers have no bargaining power and consider an equilibrium where individual workers' age-earnings profiles are piecewise constant, reflecting their outside earning opportunities at each point in time. Turnover results from employers' firing decisions rather than from workers' quitting decisions, and the equilibrium delivers realistic cross-sectional and time-series implications. Employees receive only a portion rather than the whole of the ex-ante producer's surplus from established matches, and have individual incentives to lobby for increased job security. Inefficiently low aggregate turnover may result if such lobbying efforts are successful.

Item Type: Article
Official URL:
Additional Information: © 1993 Academic Press
Divisions: Financial Markets Group
Subjects: H Social Sciences > HB Economic Theory
Date Deposited: 07 May 2008 10:18
Last Modified: 15 May 2024 23:34

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