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| Author: | Ellingsen, T. Rosen, Å. |
| Title: | Fixed or flexible? Wage-setting in search equilibrium |
| Journal: | Economica
2003 : MAY, VOL. 70:278, p. 233-250 |
| Index terms: | Pay Incomes policy Labour economics |
| Language: | eng |
| Abstract: | Why do some vacancies offer a posted wage whereas others offer a negotiable wage? The paper endogenizes the choice of wage policy in a standard sequential search model with heterogeneous workers. In particular, the authors identify circumstances such that thre exists an equilibrium in which all firms negotiate wages. They find that this equilibrium exists if and only if the labour market is sufficiently tight and worker heterogeneity is sufficiently large. |
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