Worker replacement
By: Guido Menzio, Espen R. Moen
Contributors: Moen, Espen R.; National Bureau of Economic Research
Series: NBER working paper series -- working paper 15983; Working paper series (National Bureau of Economic Research : Online) -- working paper no. 15983.
Publisher: National Bureau of Economic Research
Published: 2010
Place of publication: Cambridge, MA
Language: eng
Format: [electronic resource] /
Description: "Consider a labor market in which firms want to insure existing employees against income fluctuations and, simultaneously, want to recruit new employees to fill vacant jobs.  Firms can commit to a wage policy, i.e.  a policy that specifies the wage paid to their employees as a function of tenure, productivity and other observables.  However, firms cannot commit to employ workers.  In this environment, the optimal wage policy prescribes not only a rigid wage for senior workers, but also a downward rigid wage for new hires.  The downward rigidity in the hiring wage magnifies the response of unemployment to negative shocks"--National Bureau of Economic Research web site.
Notes: Title from PDF file as viewed on 5/20/2010.

Includes bibliographical references.

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