Campus Units

Economics

Document Type

Response or Comment

Publication Version

Published Version

Publication Date

12-1978

Journal or Book Title

The American Economic Review

Volume

68

Issue

5

First Page or Article ID Number

956

Last Page

959

Abstract

James Cassing and Jack Ochs' comment is, I believe, a very interesting extension of the analysis of my paper. Their two basic results are: (i) that congestion will occur in the search for jobs; and (ii) that given costly labor mobility, private decisions regarding voluntary quits will yield a socially optimal adjustment path if individuals have perfect foresight and if there is no congestion (externality) in the search process. Thus, they argue that even if factor prices are not rigid, the presence of congestion in the search process implies private decisions will not be socially optimal, and therefore that a subsidy will be needed to support the optimal plan.

Comments

This is a response of an article from The American Economic Review 68 (1978): 956. Posted with permission.

Copyright Owner

American Economic Association

Language

en

File Format

application/pdf

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