Date of Original Version

7-2003

Type

Article

Abstract or Description

This paper considers the effect of offer matching on labor market outcomes when the current employer has better information about his worker’s productivity than potential employers. Previous research found that when current employers have better information than potential employers, the later use job assignment to infer an employed worker’s qualifications. As a result, assignment of workers to jobs is inefficient. I find that when current employers can match outside offers the equilibrium outcome may be efficient despite the asymmetric information. I then analyze the effect of the asymmetric information on investment in human capital made by employers and workers, and find these investment levels to be first best.

DOI

10.1086/428705

Share

COinS
 

Published In

Journal of Labor Economics., 23, 2, 373-393.