Lunch Seminar: Shu Lin Wee - Carnegie Mellon University
2019-05-29 13:00 - 14:00 UTC
Replacement Hiring and the Productivity Wage-Gap joint with Sushant Acharya

Abstract:

A large and growing share of hires in the US are replacement hires. This increase coincides with a growing productivity-wage gap. We connect these trends by building a model where firms post long-lived vacancies and engage in on-the-job search for more productive workers. These features improve a firm's bargaining position while raising workers' job insecurity and the wedge between hiring and meeting rates. All three channels lower wages while raising productivity.� Quantitatively, increased replacement hiring explains half the increase in the productivity-wage gap. The socially efficient outcome features fewer low-productivity jobs and a 10% narrower productivity-wage gap.
