Mismatch versus Derived-Demand Shift as Causes of Labour Mobility.

Abstract

Labor mobility may be caused by shifts in the derived demand for labor on the part of firms or s ectors, or it may be caused by mismatches between workers and their j obs. Both reasons may be important, and this paper merges them into o ne model. It explores the consequences for (1) wage-tenure relationsh ips and (2) the issue of sluggishness of wages caused by the implied selectivity of workers into preferred jobs and sectors. Copyright 1988 by The Review of Economic Studies Limited.