%0 Report
        %A Carrillo-Tudela, Carlos
%A Kaas, Leo
        %T Worker Mobility in a Search Model with Adverse Selection
        %D 2015
        %8 2015 Sep
        %I Institute of Labor Economics (IZA)
        %C Bonn
        %7 IZA Discussion Paper
        %N 9367
        %U https://www.iza.org/publications/dp9367
        %X We analyze the effects of adverse selection on worker turnover and wage dynamics in a frictional labor market. We consider a model of on-the-job search where firms offer promotion wage contracts to workers of different abilities, which is unknown to firms at the hiring stage. 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, promoting high-ability workers only. Low-ability workers have higher turnover rates and are more often employed in low-wage firms. The model replicates the negative relationship between job-to-job transitions and wages observed in the U.S. labor market.
        %K worker mobility
%K on-the-job search
%K adverse selection
%K wage dynamics