Scandinavian Working Papers in Economics

Working Paper Series,
Uppsala University, Department of Economics

No 2000:3: Ranking of Job Applicants, On-the-job Search and Persistent Unemployment

Stefan Eriksson () and Nils Gottfries ()
Additional contact information
Stefan Eriksson: Department of Economics, Postal: Uppsala University, P.O. Box 513, SE-751 20 Uppsala, Sweden
Nils Gottfries: Department of Economics, Postal: Uppsala University, P.O. Box 513, SE-751 20 Uppsala, Sweden

Abstract: We formulate an efficiency wage model with on-the-job search where wages depend on turnover and employers may use information on whether the searching worker is employed or unemployed as a hiring criterion. We show theoretically that ranking by employment status affects both the level and the persistence of unemployment and numerically that these effects are substantial. More prevalent ranking in Europe compared to the US - because of more rigid wage structures etc. - could potentially help to explain the high and persistent European unemployment.

Keywords: Efficiency wage; Turnover; On-thejob search; Persistence; Ranking; Unemployment; Unions

JEL-codes: E24; J64

37 pages, March 7, 2000

Full text files 

wp2000_3_revised.pdf PDF-file Revised version
00wp3.pdf PDF-file Original version

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