Many workers believe personal contacts are crucial for obtaining jobs in high-wage sectors. On the other hand, firms in high-wage sectors report using employee referrals to screen and monitor new employees. This paper develops a matching model that can explain the link between inter-industry wage differentials and employee referrals. Referrals lower monitoring costs because high-effort referees...

We consider a model in which two players choose between learning about the quality of a risky option (modelled as a Poisson process with unknown arrival rate), and competing for the use of a single shared safe option that can only be used by one agent at a time. Firstly, when players cannot reverse their decision to switch to the safe option, the socially optimal policy makes them experiment fo...

Prior literature suggests that managers’ career concerns provide implicit incentive mechanisms for their behaviors (Fama (1980), Holmstrom (1999)), and may substitute the explicit incentives in their compensation contracts (Gibbons and Murphy (1992)). We show that the substitution effect can be weakened, and even reversed, when managers perform multiple tasks and are concerned about both the le...

This paper develops an equilibrium job search model in which the employed worker privately accumulates human capital and continually searches for a better paying job. Firms make wage payment based on both workers’ output and job tenure in order to encourage production and to discourage job turnover. In this environment, wages grow due to human capital accumulation (productive promotion), and th...

Big Fish in Small Pond or Small Fish in Big Pond? An Analysis of Job Mobility The statement that individuals care for status and for their position within a hierarchy has been subject to sparse economic analysis. I check this assertion by analyzing wages and status within the firm, with status measured as the worker rank in the firm wage hierarchy. More precisely, I focus on worker mobility bet...

Wage inequality in the United States has grown substantially in the past two decades. Standard supply-demand analysis in the empirics of inequality (e.g. Katz and Murphy (1992)) indicates that we may attribute some of this trend to an outward shift in the demand for high skilled labor. In this paper we examine a simple static channel in which the wage premium for skill may grow increased firm e...

When a bank grants a loan, it takes the risk that the borrower will not honor his debt. To reduce this uncertainty, banks have created instrumental evaluation methods in order to try to evaluate the risk more objectively. An analysis of financial counselors’ practices shows the limits of these methods. To obtain information needed for the financial risk evaluation and to reduce the information ...

This paper uses personnel records for workers employed by the Canadian Pacific Railway (CPR) between 1921 and 1944 to examine the extent to which observed career dynamics are consistent with the predictions of various models of internal labor markets. In addition, the findings provide new insight into how internal labor markets responded to Great Depression. Similar to some previous empirical s...

Non-Standard ‘Contingent’ Employment and Job Satisfaction: A Panel Data Analysis It is widely assumed that contingent forms of employment, such as fixed-term contracts, labour-hire and casual employment, are associated with low quality jobs. This hypothesis is tested using data from the Household, Income and Labour Dynamics in Australia (HILDA) Survey, a nationally representative household pane...

We examine a new class of games, which we call social games, where players not only choose strategies but also choose with whom they play. A group of players who are dissatis ed with the play of their current partners can join together and play a new equilibrium. This imposes new re nements on equilibrium play, where play depends on the relative populations of players in di erent roles, among o...