Consider the Diamond-Mortensen-Pissarides model of the labor market. There is a mass u of unemployed workers. Workers receive b if they do not match with a firm. Firms can post vacancies at a cost k. If a firm and a worker match, they produce output worth y. Let j be the equilibrium number of vacancies in the economy, and w the equilibrium wage. The matching function is given by m(u, j) = u j 1 . Suppose that the wage rate is determined by Nash Bargaining, so that w = y + (1)b where is the bargaining weight of the worker