Involuntary unemployment and worker self-selection
type: Item
instance of: scholarly article
title: Involuntary unemployment and worker self-selection
zbMATH Open document ID: 0637.90013
DOI: 10.1016/0022-0531(88)90259-1
author: Dilip Mookherjee
published in: Journal of Economic Theory
publication date: 1988-01-01T00:00:00Z
review text: 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.
Mathematics Subject Classification ID: 91B38
zbMATH DE Number: 4039585
zbMATH Keywords: reservation wage
zbMATH Keywords: optimal hiring policy
zbMATH Keywords: wage discrimination
zbMATH Keywords: rationing of jobs
MaRDI profile type: Publication
full work available at URL: 0022-0531(88)90259-1
OpenAlex ID: W2017168669
cites work: Regulating a Monopolist with Unknown Costs
cites work: A Competitive Efficiency Wage Model with Keynesian Features
cites work: Q3770254
cites work: Optimal Auction Design
cites work: Q5226693
description: scientific article; zbMATH DE number 4039585