Recently, a number of authors have argued that the standard search model cannot generate the observed business-cycle-frequency fluctuations in unemployment and job vacancies, given shocks of a plausible magnitude. We propose a new calibration strategy of the standard model that uses data on the cost of vacancy creation and cyclicality of wages to identify the two key parameters the value of non...

Courts are an important element in the institutional framework of labor markets, often determining the actual degree of employment protection. German labor courts provide a vivid example in this regard. However, we know relatively little about actual court behavior. A unique data set on German labor court verdicts reveals that social and other criteria like employee characteristics, the type of...

We study the location of various film-related services (such as camera rental, casting agencies or pyrotechnic services), the main determinant of interest being the human capital specificity. We show that firms which supply services with a lower firm specificity locate farther away from one another, and argue that it can be concluded that the "poaching" argument (fear of employees leaving for a...

Social interaction with colleagues is an important job attribute for many workers. To attract and retain workers, managers therefore need to think about how to create and preserve high-quality co-worker relationships. This paper develops a principal-multi-agent model where agents do not only engage in productive activities, but also in social interaction with their colleagues, which in turn cre...

This paper investigates the differences in the matching process of job seekers and vacancies to be filled between different educational and occupational groups. To investigate this issue, matching functions are estimated across different occupations and educational cohorts, that is, on an even lower level of aggregation than previously investigated in the literature, and along different dimensi...

We investigate to what extent reciprocity, exhibited by employers and employees, lead to stable gift exchange practices in the labour contract, giving rise to noncompensating wage differentials among industries and firms. We use the concept of Sequential Reciprocity Equilibrium (Dufwenberg and Kirchsteiger 1998, 2004) to incorporate players’ preferences for reciprocity in their utility function...

This paper tests the robustness of the “two-tiered labor market” in which efficient bilateral contracts emerge between firms and workers (Brown, Falk and Fehr, 2004). Our experiment introduces stochastic interruptions in firm’s ability to offer contracts. Involuntarily laid off workers are eager to be reemployed; they are unselective about job offers and do not shirk. Firm’s preference for thes...

Why do some vacancies offer a posted wage whereas others offer a negotiable wage? The paper endogenizes the choice of wage policy in a search model with heterogeneous workers. In particular, we characterize the circumstances under which there exist an equilibrium where all firms negotiate wages. Generally, we find that a tight labor market favors bargaining over posting, as does large worker he...

Equity and Efficiency in Multi-Worker Firms: Insights from Experimental Economics In this paper, we discuss recent evidence from economic experiments that study the impact of social preferences on workplace behavior. We focus on situations in which a single employer interacts with multiple employees. Traditionally, equity and efficiency have been seen as opposing aims in such work environments:...

We consider two-sided matching markets with couples. First, we extend a result by Klaus and Klijn (2005, Theorem 3.3) and show that for any weakly responsive couples market there always exists a “double stable” matching, i.e., a matching that is stable for the couples market and for any associated singles market. Second, we show that for weakly responsive couples markets the associated stable c...