Seminar «A Tale of Two Job Markets»

IZA-HSE University International Labor Seminar was held on March 16, 2021.

Speaker: Maxime Liegey (University of Strasbourg).

Title: A Tale of Two Job Markets.

In this paper we postulate a novel model of random and directed search in labour markets. The decision is endogenized by giving employers the option to invest in being "visible" to workers. Employers differ in terms of their productivity and therefore their incentives to invest in being visible to workers. If they do invest, workers may perfectly direct their search towards such employers thus increasing the probability of the employer being matched. We show that if we introduce a minimum wage into this set up, larger firms, who are less often bound by this wage will gain a larger weight in the distribution of employment. However, we also find that depending on the marginal employer deciding to be "visible" this effect may be countered in the form of a composition effect. We then proceed to analyse French data to confirm or dis-confirm if the qualitative predictions of the model hold. Joint paper with Markus Gebauer (ICEF-HSE Moscow).