Working Paper Series
Nils Henrik Schager
The Wage Policy of a Firm when Recruitment is a Wage Dependent Poisson Process and Wages are Downward Rigid
Abstract: The paper contains an analysis of a firm's optimal wage
and recruitment policy, when the dynamic labor supply to the firm is
specified as a Poisson distributed flow of job-applicants, whose
reservation wages are distributed in a fairly general way. Provided that
the firm is not allowed to lower its wage level over time, it has recently
been shown by the author that the optimal policy is to establish a constant
wage level over future employment states. The paper explores the further
properties of the optimal wage and its response to changes in the
parameters of the decision problem.
Keywords: Recruitment; labour supply; optimal wage; wage rigidity; (follow links to similar papers)
JEL-Codes: J30; (follow links to similar papers)
34 pages, July 1986
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