Job search under asymmetric information: endogenous wage dispersion and unemployment stigma

Feng, Shuaizhang; Lefgren, Lars; Platt, Brennan C.; Zheng, Bingyong

doi:10.1007/s00199-018-1099-7

Econ Theory

2018

DOI: 10.1007/s00199-018-1099-7

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Job search under asymmetric information: endogenous wage dispersion and unemployment stigma

Shuaizhang Feng

Lars Lefgren

Brennan C. Platt

et al.

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Cited by 8 publications

(2 citation statements)

References 39 publications

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“…Screening reveals information about worker types inWolthoff (2018) andFeng et al (2019).7 SeeMoen (1997);Acemoglu and Shimer (1999);Burdett et al (2001) for a method review, and Galenianos and Kircher (2012) for our employed "market utility" approach.8 We have also considered alternative distributions of match values and have not found any significant deviation from our main results. More details are provided in Sect.…”

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confidence: 93%

Prediction algorithms in matching platforms

Hämäläinen,

Petrikaitė

2024

Econ Theory

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We follow the future trajectory of more targeted wage formation in labor matching platforms, such as freelancing, crowd-sourcing, home-delivery, and ride-hailing, where local job search is coordinated by improving prediction algorithms. A labor matching platform is modelled as a directed search and matching market. We observe that targeted wage setting promotes efficient matching and longer employment spells. However, because a higher employment rate accentuates any disparities between available workers and vacancies, the effects of targeted wage setting on firm competition depend on prevailing market tightness. The impact of targeted wage formation on workers is positive when the vacancy-to-worker ratio is intermediate but turns negative at both extremes. Our results suggest that targeted wage setting may benefit occasional workers while potentially posing drawbacks for full-time platform workers.

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confidence: 93%

Prediction algorithms in matching platforms

Hämäläinen,

Petrikaitė

2024

Econ Theory

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“…12 Feng et al (2019) consider a related model with intermediate degrees of firm knowledge in the labor market where employers learn certain fractions of applicants' quality via interviews. Also in the labor market, Meier et al (2014) analyze two endpoint scenarios of fully informed and uninformed firms.…”

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confidence: 99%

Technology heterogeneity and market structure

Eling

Jia

Lin

et al. 2021

J of Risk & Insurance

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New technologies may allow principals or firms to learn more quickly about the characteristics of their agents or clients-at some cost of employing that technology. We study the implications of this speedversus-cost tradeoff for equilibrium pricing and purchasing decisions in insurance markets featuring adverse selection. In particular, we study dynamic competitive equilibrium in a theoretical model featuring individuals who differ in their privately known risk types and featuring two types of insurers: conventional insurers who employ a legacy learning technology and tech insurers who employ a new technology. Equilibrium in our model features sorting of low-risk types into tech firms and high-risk types into conventional firms. We show, intuitively, that lowering the technology cost raises this cutoff and thus increases the equilibrium market share of tech firms. Perhaps counter-intuitively, however, we show that adverse selection effects within the conventional market can cause an attempt by conventional insurers to catch up with tech firms-by increasing the speed at which they learn about the risk types of their insureds-to backfire and lead to an increase in the market share of tech

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Price dispersion in dynamic competition

Guthmann

2024

Econ Theory

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In product markets, substantial price dispersion exists for transactions of physically identical goods. Moreover, in these markets, incumbent firms sell at higher prices than entrants. This paper presents a theory of price formation under dynamic competition that explains these facts by assuming both that consumers have imperfect access to firms and that their degree of access depends on each firm’s sales history. The model has a unique equilibrium that features randomized pricing strategies, with incumbents always posting higher prices than entrants. For a fixed underlying environment, the equilibrium converges to a stationary equilibrium over time. As firms’ entry and exit rates approach zero, this stationary equilibrium converges to perfect competition.

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Job search under asymmetric information: endogenous wage dispersion and unemployment stigma

Cited by 8 publications

References 39 publications

Prediction algorithms in matching platforms

Prediction algorithms in matching platforms

Technology heterogeneity and market structure

Price dispersion in dynamic competition

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