Going the extra mile: Effort by workers and job-seekers

Arbeitspapier

We introduce two types of effort into an otherwise standard labor search model to examine indeterminacy and sunspot equilibria. Variable labor effort gives rise to increasing returns to hours in production. This makes workers more valuable and contributes to self-fulfilling profit expectations, raising the likelihood of indeterminacy. Variable search effort makes workers search more intensively in a tighter labor market, which alleviates congestion and reduces the likelihood of indeterminacy. Indeterminacy disappears completely when vacancy posting costs are replaced with hiring costs.

Object Details

• ISBN: 978-3-95729-613-9
• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Deutsche Bundesbank Discussion Paper ; No. 29/2019

Classification and Topics

• Classification: Wirtschaft ; Macroeconomics: Production ; Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity ; Business Fluctuations; Cycles ; Incomes Policy; Price Policy ; Macro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on the Macro Economy‡
• Subject: determinacy ; effort ; hours ; labor market frictions ; search intensity

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Hertweck, Matthias S. ; Lewis, Vivien ; Villa, Stefania
• Event: Veröffentlichung
• (who): Deutsche Bundesbank
• (where): Frankfurt a. M.
• (when): 2019

Further information

• Handle: http://hdl.handle.net/10419/203164
• Last update: 10.03.2025, 11:44 AM CET