The structure of a firm’s optimal non-decreasing wage policy when recruitment is a wage dependent Poisson process
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During the last fifteen years there has been a growing number of studies, in which the firm is supposed to face a labor market where job applicants are imperfectly informed about the exact location of job and wage offers. Job matching is thus characterized by search under uncertainty. Nonetheless the models used assume almost universally that the firm acts as if the flows of labor were known with certainty at different levels of its wage offer. Consequently the optimal wage policy is derived by using deterministic control methods (see e.g. Leban, 1982a; Mortensen, 1971; Pissarides, 1976; Salop, 1973; Virén, 1979).
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