Between Search and Walras

Eugene Kandel*, Avi Simhon

*Corresponding author for this work

Research output: Contribution to journalReview articlepeer-review

3 Scopus citations


We present a model in which unemployed workers simultaneously sample n potential employers. By varying n, we nest search and Wal-rasian-type models of the labor market. We show that low values of n yield typical search equilibria: the wages are dispersed below the marginal productivity of labor. Interestingly, as n exceeds a relatively small threshold, the Walrasian-type equilibrium emerges with the competitive wage quoted by all firms. For intermediate values of n, the equilibrium is a hybrid of the Walrasian and search equilibria. The model generates wage rigidity and yields novel predictions regarding the comovement of wages, firm turnover, and unemployment.

Original languageAmerican English
Pages (from-to)59-85
Number of pages27
JournalJournal of Labor Economics
Issue number1
StatePublished - Jan 2002


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