TY  - RPRT
        AU  - Carrillo-Tudela, Carlos
AU  - Kaas, Leo
        TI  - Wage Dispersion and Labor Turnover with Adverse Selection
        PY  - 2011/Aug/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 5936
        UR  - https://www.iza.org/publications/dp5936
        AB  - 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.
        KW  - adverse selection
KW  - on-the-job search
KW  - wage dispersion
KW  - sorting
        ER  -