Compare two unemployed workers: one is 25 years old while the other is 55 years old. Both workers have similar skills and face the same wage offer distribution. Suppose that both workers also incur similar search costs. Which worker will have a higher asking wage? Why? Can search theory explain why the unemployment rate of young workers differs from that of older workers?
Compare two unemployed workers: one is 25 years old while the other is 55 years old. Both workers have similar skills and face the same wage offer distribution. Suppose that both workers also incur similar search costs. Which worker will have a higher asking wage? Why? Can search theory explain why the unemployment rate of young workers differs from that of older workers?
Chapter7: Unemployment And Inflation
Section: Chapter Questions
Problem 16E
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Compare two unemployed workers: one is 25 years old while the other is 55 years old. Both workers have similar skills and face the same wage offer distribution. Suppose that both workers also incur similar search costs. Which worker will have a higher asking wage? Why? Can search theory explain why the
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