%0 Report
        %A Carrillo-Tudela, Carlos
%A Kaas, Leo
        %T Wage Dispersion and Labor Turnover with Adverse Selection
        %D 2011
        %8 2011 Aug
        %I Institute of Labor Economics (IZA)
        %C Bonn
        %7 IZA Discussion Paper
        %N 5936
        %U https://www.iza.org/publications/dp5936
        %X We consider a model of on-the-job search where firms offer long-term wage contracts to workers of different ability. Firms do not observe worker ability upon hiring but learn it gradually over time. With sufficiently strong information frictions, low-wage firms offer separating contracts and hire all types of workers in equilibrium, whereas high-wage firms offer pooling contracts designed to retain high-ability workers only. Low-ability workers have higher turnover rates, they are more often employed in low-wage firms and face an earnings distribution with a higher frictional component. Furthermore, positive sorting obtains in equilibrium.
        %K adverse selection
%K on-the-job search
%K wage dispersion
%K sorting