QUIT BEHAVIOR UNDER IMPERFECT INFORMATION: SEARCHING, MOVING, LEARNING

The paper provides a search ––– theoretic interpretation of a well-known empirical regularity ––– the inverse relationship between quit rates and job tenure. We consider a setting where the employed job searcher has incomplete information about non-wage job attributes at the time acceptance decisions are made; hence jobs will be accepted (or refused) without full knowledge of the value of the offers. The model implies that workers with long tenure will be less likely to quit, holding wage rates constant. We also show that a risk-neutral worker is willing to accept a wage offer that falls below his current "full" wage (in the absence of moving costs).     

PROFIT SHARING, WAGE BARGAINING, AND UNEMPLOYMENT

The Paper examines the effects of profit sharing in an economy with decentralized wage bargaining. Profit sharing makes workers' income more sensitive to wage changes, and this leads to wage moderation. But economy-wide profit sharing may also improve worker's outside income opportunities, and this strengthens the union's hand in bargaining and tend to raise wages. It turns out that equilibrium unemployment is reduced by profit sharing as long as the elasticity of substitution between labour and capital is less than one, whereas unemployment is increased if the elasticity of substitution is greater than one.