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Directed search with multi-vacancy firms

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  • Lester, Benjamin

Abstract

I construct a directed search model in which firms decide whether to enter a market and how many positions to create. Within this framework, the number of firms and the size of each firm are determined endogenously, wages play an allocative role in the matching process, and the frictions inherent in this process derive from the equilibrium behavior of workers and firms. I characterize the (unique) equilibrium. Comparative statics generate testable implications for cross-sectional variation in matching efficiency, as well as the dynamic behavior of vacancies and unemployment. Moreover, allowing for ex-ante heterogeneity across firms, the model can easily and naturally generate the observed relationship between firm size, wages, profitability, and hiring.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Theory.

Volume (Year): 145 (2010)
Issue (Month): 6 (November)
Pages: 2108-2132

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Handle: RePEc:eee:jetheo:v:145:y:2010:i:6:p:2108-2132

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Web page: http://www.elsevier.com/locate/inca/622869

Related research

Keywords: Directed search Matching Vacancies and unemployment Firm size;

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Citations

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Cited by:
  1. Athanasios Geromichalos, 2012. "Directed Search and the Bertrand Paradox," Working Papers 1221, University of California, Davis, Department of Economics.
  2. William Hawkins, . "Bargaining with Commitment Between Workers and Large Firms," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics.
  3. Klaus Kultti & Mats Godenhielm, 2011. "Directed search with endogenous capacity," 2011 Meeting Papers 1025, Society for Economic Dynamics.
  4. Athanasios Geromichalos, 2010. "Directed Search and Optimal Production," Working Papers 1016, University of California, Davis, Department of Economics.
  5. Athanasios Geromichalos, 2014. "Online Appendix to "Unemployment Insurance and Optimal Taxation in a Search Model of the Labor Market"," Technical Appendices 12-210, Review of Economic Dynamics.
  6. Gabriele Camera & Cemil Selcuk, 2010. "Multi-player Bargaining with Endogenous Capacity," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 13(3), pages 637-653, July.
  7. Fei Li & Can Tian, 2012. "Directed Search and Job Rotation," PIER Working Paper Archive 12-024, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
  8. Leo Kaas & Philipp Kircher, 2011. "Efficient Firm Dynamics in a Frictional Labor Market," CESifo Working Paper Series 3336, CESifo Group Munich.
  9. Anton A. Cheremukhin & Paulina Restrepo Echavarria, 2008. "The Labor Wedge as a Matching Friction," 2008 Meeting Papers 209, Society for Economic Dynamics.
  10. Klaus Kultti & Eeva Mauring, 2014. "Low price signals high capacity," Journal of Economics, Springer, vol. 112(2), pages 165-181, June.
  11. Moritz Ritter & John Kennes & Benoit Julien, 2013. "Bidding for Teams," 2013 Meeting Papers 989, Society for Economic Dynamics.
  12. Gomis-Porqueras, Pedro & Julien, Benoit & Chengsi, Wang, 2012. "Informative Advertising in Directed Search," MPRA Paper 38057, University Library of Munich, Germany.
  13. Li, Fei & Tian, Can, 2011. "Directed search and job rotation," MPRA Paper 33875, University Library of Munich, Germany.
  14. Kaas, Leo, 2008. "Variable Search Intensity in an Economy with Coordination Unemployment," IZA Discussion Papers 3697, Institute for the Study of Labor (IZA).

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