Abstract
We examine wages and employment for junior and senior workers when seniority is firm-specific. We show that if workers are risk averse, the firm chooses both the junior and senior wage independently of the wage offers received by its workers from other firms. Junior workers are paid less than the value of their marginal product and senior workers are paid more. If the firm can monitor its workers' outside offers, it will choose to lay off workers with good offers, but which, nevertheless, may not be so good as its own senior wage.
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.
