| Abstract |
This paper studies how workers’ wealth and search behavior interact with firms’ wage setting and job creation to shape aggregate labor-market outcomes. I develop an equilibrium job-ladder model with random search and wage posting, where workers choose consumption, saving, and search intensity, and firms set wages and create vacancies. Wealth affects both the level and responsiveness of job search, influencing vacancy yields and turnover rates across the productivity distribution—key determinants of equilibrium wage setting and job creation. Calibrated to U.S. data, the model shows that moving low-wealth workers away from the borrowing limit reduces their search effort, reshaping the job ladder through firms’ responses. Initial-job wages fall while returns to job switching rise, as fewer poaching opportunities lead productive firms to offer higher wages but create fewer vacancies. |