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THE ECONOMICS OF JOB SEARCH: A COMMENT
Author(s) -
BORJAS GEORGE J.,
GOLDBERG MATTHEW S.
Publication year - 1978
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/j.1465-7295.1978.tb00498.x
Subject(s) - unobservable , reservation wage , economics , wage , reservation , search theory , consumption (sociology) , microeconomics , econometrics , labour economics , computer science , computer network , social science , sociology
This paper expands the conventional model of job search by relaxing the assumption that uncertainty about the job offer disappears once search is completed. Instead, we hypothesize that uncertainty continues even after search since the job offer contains not only an observable money wage but also an unobservable job consumption component. We show that the reservation wage decision rule is robust even under these very general conditions. The paper also analyzes the effect of this type of residual uncertainty on the level of the reservation wage.