Raids and Imitation / Edward P. Lazear.

By:

Lazear, Edward P

Contributor(s):

National Bureau of Economic Research

Material type: Text

TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w1158.Publication details: Cambridge, Mass. National Bureau of Economic Research 1983.Description: 1 online resource: illustrations (black and white)Online resources:

Available additional physical forms:

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Abstract: Many job changes occur without intervening spells of unemployment. A model is constructed in an attempt to understand this phenomenon. It implies that the best workers are hired away first because, with imperfect information, prices do not fully adjust for quality. Thus, there develops stigma associated with failing to receive outside offers. The force of the stigma, which affects wages, depends upon the likelihood of discovering a worker's ability, the size of the market, and the speed of diffusion of information. In some occupations, it implies that there quickly develop pronounced differences in the treatment of raided and unraided workers. A consequence is a theory of occupational wage dispersion. The Peter Principle - that workers are promoted to a level of incompetence - is a direct implication.The model can be applied to product markets as well to explain the relationship between price and time on the shelf.

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Item type	Home library	Collection	Call number	Status	Date due	Barcode	Item holds
Working Paper	Biblioteca Digital	Colección NBER	nber w1158 (Browse shelf(Opens below))	Not For Loan

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Previous	nber w11577 Experimental Analysis of Neighborhood Effects /	nber w11578 Understanding the Effects of Government Spending on Consumption /	nber w11579 How Much Do Banks Use Credit Derivatives to Reduce Risk? /	nber w1158 Raids and Imitation /	nber w11580 Fiscal Divergence and Business Cycle Synchronization: Irresponsibility is Idiosyncratic /	nber w11581 What Are Firms? Evolution from Birth to Public Companies /	nber w11582 Education and Nonmarket Outcomes /	Next

June 1983.

Many job changes occur without intervening spells of unemployment. A model is constructed in an attempt to understand this phenomenon. It implies that the best workers are hired away first because, with imperfect information, prices do not fully adjust for quality. Thus, there develops stigma associated with failing to receive outside offers. The force of the stigma, which affects wages, depends upon the likelihood of discovering a worker's ability, the size of the market, and the speed of diffusion of information. In some occupations, it implies that there quickly develop pronounced differences in the treatment of raided and unraided workers. A consequence is a theory of occupational wage dispersion. The Peter Principle - that workers are promoted to a level of incompetence - is a direct implication.The model can be applied to product markets as well to explain the relationship between price and time on the shelf.