Ingmar Nyman, Matthew J. Baker
Job Hoarding
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- 10.1628/093245617X14860182052051
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We study a labor market in which employers and workers search for a trading partner, and workers have private information about the value of a match. We show that competitive pressure can induce workers to take jobs for which they are ill suited. This leads to insufficient frictional unemployment and search, and lower average productivity and utility. A fully tax-financed unemployment benefit can eliminate the inefficiency. Moreover, because inefficient job hoarding by workers occurs when there are many workers per job, the analysis suggests a novel explanation for the stylized macroeconomic fact that labor productivity is procyclical. (JEL: D24, D82, D83, E32, J64)