Job Hoarding

We study a labor market in which employers and workers search for a trading partner, and workers have private information about the value of a match. We show that competitive pressure can induce workers to take jobs for which they are ill suited. This leads to insufficient frictional unemployment an...

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Bibliographic Details
Published inJournal of institutional and theoretical economics Vol. 173; no. 4; pp. 688 - 722
Main Authors Baker, Matthew J., Nyman, Ingmar
Format Journal Article
LanguageEnglish
Published Tübingen Mohr Siebeck GmbH & Co. KG 01.12.2017
Mohr Siebeck
Subjects
Business cycles
Compensation
Decision making
Economic models
Economic theory
Employers
Hoarding
Labor market
Labor productivity
Macroeconomics
Political economy
Productivity
Taxation
Trading
Unemployment benefits
Unemployment insurance
Wages & salaries
Workers
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Summary:We study a labor market in which employers and workers search for a trading partner, and workers have private information about the value of a match. We show that competitive pressure can induce workers to take jobs for which they are ill suited. This leads to insufficient frictional unemployment and search, and lower average productivity and utility. A fully tax-financed unemployment benefit can eliminate the inefficiency. Moreover, because inefficient job hoarding by workers occurs when there are many workers per job, the analysis suggests a novel explanation for the stylized macroeconomic fact that labor productivity is procyclical.
ISSN:0932-4569
1614-0559
DOI:10.1628/093245617X14860182052051