Jan Rouwendal, assistent professor, Amsterdam, The Netherlands, Jos Van Ommeren, Free University
Regional Economics
, Amsterdam, The Netherlands
Optimal recruitment behavior of firms in a spatial labor market - Will travel costs be reimbursed? (assigned to theme
In this paper we consider optimal recruitment behavior of firms in the setting of a spatial labor markets where employers with vacant positions and job searchers have imperfect information. Job searchers determine the acceptance of an offer on the basis of the value of the (gross) wage minus commuting costs and follow a reservation wage strategy. Firms with vacancies offer a wage and, possibly, partial or complete reimbursement of commuting costs. We consider optimal wage setting and reimbursement behavior of a single firm in a large labor market. We explore the similarities between reimbursement of travel costs and price discrimination under monopoly and consider the usefulness of introducing a ceiling on the travel costs that can be reimbursed as a third instrument of recruitment behavior. Introduction of such a ceiling implies redlining of workers.
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