Adverse selection and employment cycles

• 成果类型: Article
• 署名作者: Montgomery, JD
• 署名单位: University of London; London School Economics & Political Science
• 刊物名称: JOURNAL OF LABOR ECONOMICS
• ISSN/ISSBN: 0734-306X
• DOI: 10.1086/209921
• 发表日期: 1999
• 页码: 281-297
• 关键词: labor-market; equilibrium; unemployment; MODEL

摘要

This article examines a dynamic adverse-selection model that generates equilibrium employment cycles. In the model, firms hire workers from unemployment, observe workers' productivity through time, and (following the profit-maximizing rule) eventually fire unproductive workers. If hiring costs are low, the dynamical system converges to a steady state in which the unemployment pool contains mostly low-ability workers. However, if hiring costs are sufficiently large, this lemons effect would make firms unwilling to hire workers. In this case, the system converges to a cyclical equilibrium in which firms alternate between hiring and not hiring.