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Equilibrium Poaching in Labor Markets

Ori Zax & Yanay Farja

CESifo Economic Studies2024https://doi.org/10.1093/cesifo/ifae001article
AJG 2ABDC C
Weight
0.30

What the paper says

Abstract When firms have to employ a high-ability worker at a managerial position, sometimes they have to poach a promoted worker from another firm without observing that worker’s ability. We discuss the implications of this practice for the promotion signaling framework. Our model shows the turnover of workers and the wages paid at such an economy, and how they depend on the worker’s own ability and the ability of other workers in the firm. We show that due to the winner’s curse, firms make a non-positive expected profit from poaching a worker. In that case, non-promoted workers “subsidize” the wage paid to their manager. The need to hire managers without observing their ability is a new barrier to entry for firms (JEL codes: M51, J31).

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https://doi.org/https://doi.org/10.1093/cesifo/ifae001

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@article{ori2024,
  title        = {{Equilibrium Poaching in Labor Markets}},
  author       = {Ori Zax & Yanay Farja},
  journal      = {CESifo Economic Studies},
  year         = {2024},
  doi          = {https://doi.org/https://doi.org/10.1093/cesifo/ifae001},
}

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Evidence weight

0.30

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

F · citation impact0.00 × 0.4 = 0.00
M · momentum0.50 × 0.15 = 0.07
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.