Abstract
Many job changes occur without intervening spells of unemployment. A model is constructed in an attempt to understand this phenomenon. It implies that the best workers are hired away first because, with imperfect information, prices do not fully adjust for quality. Thus, there develops stigma associated with failing to receive outside offers. The force of the stigma, which affects wages, depends upon the likelihood of discovering a worker's ability, the size of the market, and the speed of diffusion of information. In some occupations, it implies that there quickly develop pronounced differences in the treatment of raided and unraided workers. A consequence is a theory of occupational wage dispersion. The Peter Principle - that workers are promoted to a level of incompetence - is a direct implication.The model can be applied to product markets as well to explain the relationship between price and time on the shelf.
Published Version (
Free)
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
