Market Power and Separating Equilibrium in Job Market Signaling

Job Market Signaling

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Job Market Signaling and Job Search

The high cost of searching for employers borne by prospective employees increases friction in the labor market and inhibits formation of e¢ cient employer-employee relationships. It is conventionally agreed that mechanisms that reduce the search costs (e.g., internet portals for job search) lower unemployment and improve overall welfare. We demonstrate that a reduction of the search costs may h...

Job market signaling and employer learning

Job Market Signaling and Employer Learning This paper extends the job market signaling model of Spence (1973) by allowing firms to learn the ability of their employees over time. Contrary to the model without employer learning, we find that the Intuitive Criterion does not always select a unique separating equilibrium. When the Intuitive Criterion bites and information is purely asymmetric, the...

Job Market Signaling with Human Capital Investment

In this paper, we consider the social value of signaling by recasting the Spence’s (1973) signaling model in a causal relationship: human capital investment is necessary to reduce the marginal cost of signaling. Our model contains distinct features: (i) the choice of signaling affects the level of human capital investment and (ii) the proportion of high and low type in the entire workers is end...

Nash Bargaining, On-the-job Search and Labor Market Equilibrium