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Job Queues and Layoffs in Labor Markets with Flexible Wages
Journal of Political Economy
Vol. 88, No. 3 (Jun., 1980), pp. 526-538
Published by: The University of Chicago Press
Stable URL: http://www.jstor.org/stable/1831930
Page Count: 13
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Models of a heterogeneous labor market are presented in which a worker's acceptance wage is an increasing function of his ability, and in which firms have imprecise information concerning the labor endowment of particular workers.Because the expected labor endowment of a hiree is an increasing function of the firm's wage offer, industrial firms may choose not to lower wages when confronted with a queue of job applicants. Rejected job applicants will not be able to increase their probability of employment by lowering their acceptance wages. Firms may choose to simultaneously hire and fire workers.
Journal of Political Economy © 1980 The University of Chicago Press