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Excessive Labour Raiding
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Labour raiding refers to firms recruiting and hiring employed workers. The literature on labour raiding supports the idea that raiding sorts workers into their most productive positions. I present a model where an outside firm decides whether or not to pay to learn the match‐quality of an employed worker and the employer decides whether or not to pay its worker a high wage that pre‐empts the raiding. I show that the employer may pay a low wage and gamble that it will not be raided rather than use a pre‐emptive wage. This leads to an excessive amount of raiding.
Title: Excessive Labour Raiding
Description:
Labour raiding refers to firms recruiting and hiring employed workers.
The literature on labour raiding supports the idea that raiding sorts workers into their most productive positions.
I present a model where an outside firm decides whether or not to pay to learn the match‐quality of an employed worker and the employer decides whether or not to pay its worker a high wage that pre‐empts the raiding.
I show that the employer may pay a low wage and gamble that it will not be raided rather than use a pre‐emptive wage.
This leads to an excessive amount of raiding.
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