High Turnover Costs Drive Up Wages in Diverse Labor Markets
The article explores how the costs of workers changing jobs affect wage negotiations between workers and companies. They look at a scenario where workers have different abilities, and companies only find out how good a worker is after hiring them. The researchers figure out how many people will be employed and what the minimum quality standard should be in a situation where everyone acts in their own best interest, compared to a situation where everyone acts in the best interest of society.