Search Results

Author: Fuller, David L.
Resulting in 1 citation.
1. Engelhardt, Bryan
Fuller, David L.
Labor Force Participation and Pair-wise Efficient Contracts with Search and Bargaining
Labour Economics 19,3 (June 2012): 388-402.
Also: http://www.sciencedirect.com/science/article/pii/S0927537112000048
Cohort(s): NLSY97
Publisher: Elsevier
Keyword(s): Bargaining Model; Job Search; Labor Force Participation; Wage Models

A “constant” wage is pair-wise inefficient in a standard search model when workers endogenously separate from employment. We derive a pair-wise efficient employment contract that involves workers paying a hiring fee (or bond) upon the formation of a match. We estimate the constant wage and pair-wise efficient contract assuming the hiring fee is unobservable, and find evidence to reject the pair-wise efficient contract in favor of the constant wage rule. A counterfactual experiment reveals the current level of labor force participation to be 9.6% below the efficient level, and a structural shift to the pair-wise efficient contract improves welfare by roughly 3.5%.
Bibliography Citation
Engelhardt, Bryan and David L. Fuller. "Labor Force Participation and Pair-wise Efficient Contracts with Search and Bargaining." Labour Economics 19,3 (June 2012): 388-402.