Equilibrium Unemployment and the Efficient Job-Finding Rate

  title={Equilibrium Unemployment and the Efficient Job-Finding Rate},
  author={Chitra Ramaswami},
A model of the labor market is constructed in which unemployment is generated by labor turnover and the process of selecting new recruits. Firms' recruitment policies affect workers' job-finding probabilities and are known to job seekers by reputation. The value of visiting a firm thus depends on the probability of being hired as well as on the terms of employment and, in equilibrium, is equal at all firms. The principal results obtained are that the equilibrium unemployment rate is efficient… CONTINUE READING