formula_4Let formula_5 be the wage, formula_6 the interest rate, formula_7 the instantaneous income of unemployed persons, formula_8 the exogenous job destruction rate, formula_9 the labor market tightness, and formula_10 the job finding rate. The profits formula_11 and formula_12 expected from a filled job and a vacant one are:formula_13where formula_14 is the cost of a vacant job and formula_15 is the productivity. When the "free entry condition" formula_16 is satisfied, these two equalities yield the following relationship between the wage formula_5 and labor market tightness formula_9: