Does the early bird always get the worm? market institutions and the timing of employment decisions |
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Authors: | Xiaolin Xing |
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Institution: | (1) National University of Singapore, 0511 Singapore |
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Abstract: | Unravelling of appointment dates can be observed in some entry-level labor markets but not in others. A comparison of different
markets shows how the costs of breaking contracts and being rematched can affect the timing of appointments and market behavior.
If contracts can be terminated at any time by workers and if rematching costs are relatively small compared to the benefits
from changing matches, early appointments in an entry-level labor market confers no benefit on firms. Firms then have no incentives
to make early offers. However, if the costs offset the benefits from changing employment, firms that cannot compete with their
principal competitors may prefer to make offers before some critical information becomes available rather than wait for the
time when employment can actually start. Such a labor market may experience early appointments. But if the most desirable
firms do not issue early offers, other firms may be rejected in any early period. Therefore, the most desirable firms can
work together to halt unravelling.
I am indebted to Esquire Donna Gerson and Koh Song Hui who extended help in writing this paper. My special thanks should be
given to Alvin Roth for his suggestions and comments. |
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Keywords: | |
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