TY  - JOUR
AU  - Blanchard,Olivier Jean
AU  - Diamond,Peter
TI  - Ranking, Unemployment Duration, and Wages
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 3387
PY  - 1990
Y2  - June 1990
UR  - http://www.nber.org/papers/w3387
L1  - http://www.nber.org/papers/w3387.pdf
N1  - Author contact info:
Olivier J. Blanchard
International Monetary Fund
Economic Counsellor and Director
Research Department
700 19th Street, NW
Rm. 10-700
Washington DC, 20431
Tel: 202-623-7825
Fax: 202-623-7271
E-Mail: blanchar@mit.edu

Peter A. Diamond
15 Franklin Rd
Lexington, MA 02420
Tel: 617/253-3363
Fax: 617/253-1330
E-Mail: pdiamond@mit.edu
AB  - Firms often receive multiple acceptable applications for vacancies, requiring a choice among candidates. This paper contrasts equilibria when firms select workers at random and when firms select the worker with the shortest spell of unemployment, called ranking. With the filling of vacancies unaffected by the selection rule, both equilibria have the same aggregate dynamics, but different distributions of unemployment durations. With the threat point for the Nash bargained wage being a worker with zero unemployment duration, the wage with ranking is much more sensitive to changes in the tightness of the labor market. The same holds for efficiency wages. 
ER  -