We propose a dynamic efficiency wage model with learning by doing. By taking into account the change inthe stock of workers’ knowledge, firms set efficiency wages such that the effort–wage elasticity is not in general equal to one.

Heterogeneous firms facing demand-induced price fluctuations imperfectly compete for heterogeneous workers. It is shown that unemployment may arise in equilibrium because of the combination of uncertainty on product price and mismatch between workers’ skills and firms’ job requirements.

We consider a finite number of firms, which compete imperfectly for heterogeneous workers. Firms produce a homogeneous good, sold on a competitive market, and face demand-induced price fluctuations. It is then shown that unemployment may arise in equilibrium because of both uncertainty of...

The paper mainly addresses three questions: 1) do workers tend to be employed by employers of the same ethnic group; 2) what is the structure of the equilibrium wage contract; and 3) do more ethnically homogeneous labour markets tend to have different labour contracts than more ethnically...