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The Immobile Incumbent Problem in a Model of Short-Term Wage-Posting

Alan Manning

German Economic Review2025https://doi.org/10.1515/ger-2024-0127article
AJG 2ABDC B
Weight
0.37

Abstract

This paper takes the canonical Burdett-Mortensen model of wage-posting and relaxes the assumption that wages are set once-for-all, instead assuming they can only be committed one period at a time. It derives a closed-form solution for a steady-state Markov Rank-Preserving Equilibrium and shows how this relates to the canonical model and performs some comparative statics on it. But it is shown that a Rank-Preserving Equilibrium may fail to exist because employers have more monopsony power over existing workers than new recruits and that this non-existence can be a problem for plausible parameter values. It is shown how a Rank-Inverting Equilibrium may exist. It is argued that this problem is likely to occur in a wide range of search models.

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https://doi.org/https://doi.org/10.1515/ger-2024-0127

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@article{alan2025,
  title        = {{The Immobile Incumbent Problem in a Model of Short-Term Wage-Posting}},
  author       = {Alan Manning},
  journal      = {German Economic Review},
  year         = {2025},
  doi          = {https://doi.org/https://doi.org/10.1515/ger-2024-0127},
}

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The Immobile Incumbent Problem in a Model of Short-Term Wage-Posting

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Evidence weight

0.37

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.16 × 0.4 = 0.06
M · momentum0.53 × 0.15 = 0.08
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.