Article ID: | iaor201111969 |
Volume: | 44 |
Issue: | 2 |
Start Page Number: | 709 |
End Page Number: | 717 |
Publication Date: | May 2011 |
Journal: | Canadian Journal of Economics/Revue canadienne d'conomique |
Authors: | Hahm Sang-Moon, Mayer Katarina |
Keywords: | modelling, unemployment |
In this paper, we study a model that incorporates costly job search into an efficiency wage model. We show that the relationship between wages and detection rates is ambiguous in this framework. The model can generate a positive relationship, consistent with empirically reasonable values for unemployment rates, job finding rates, and employment duration.