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Selective hiring and welfare analysis in labor market models
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Merkl, Christian and Van Rens, Thijs (2019) Selective hiring and welfare analysis in labor market models. Labour Economics, Volume 57 . pp. 117-130. doi:10.1016/j.labeco.2019.01.008
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Official URL: https://doi.org/10.1016/j.labeco.2019.01.008
Abstract
Firms select not only how many, but also which workers to hire. Yet, in most labor market models all workers have the same probability of being hired. We argue that selective hiring crucially affects welfare analysis. We set up a model that is isomorphic to a search model under random hiring but allows for selective hiring. With selective hiring, the positive predictions of the model change very little, but implications for welfare are different for two reasons. First, a hiring externality occurs with random but not with selective hiring. Second, the welfare costs of unemployment are much larger with selective hiring, because unemployment risk is distributed unequally across workers.
| Item Type: | Journal Article | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Subjects: | H Social Sciences > HD Industries. Land use. Labor | ||||||||
| Divisions: | Faculty of Social Sciences > Economics | ||||||||
| Library of Congress Subject Headings (LCSH): | Labor market, Unemployment insurance, Unemployment insurance -- Econometric models, Employees -- Selection and appointment, Employees -- Recruiting | ||||||||
| Journal or Publication Title: | Labour Economics | ||||||||
| Publisher: | Elsevier BV | ||||||||
| ISSN: | 0927-5371 | ||||||||
| Official Date: | April 2019 | ||||||||
| Dates: |
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| Volume: | Volume 57 | ||||||||
| Page Range: | pp. 117-130 | ||||||||
| DOI: | 10.1016/j.labeco.2019.01.008 | ||||||||
| Status: | Peer Reviewed | ||||||||
| Publication Status: | Published | ||||||||
| Access rights to Published version: | Restricted or Subscription Access | ||||||||
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