Scale Effects in Markets with Search
AbstractReduced-form tests of scale effects in markets with search, run when aggregate matching functions are estimated, may miss important scale effects at the micro level, because of the reactions of job searchers. A semi-structural model is developed and estimated on a British sample, testing for scale effects on the offer arrival rate and the wage offer distribution. When contrasting London with the rest of the country we find scale effects in wage offers. But the larger market delivers higher realized wages and not more matches, because the scale effects on matches are offset by the response of reservation wages.
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Bibliographic InfoPaper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0571.
Date of creation: Jun 2003
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Web page: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP
Job search; economies of scale; matching; aggregate matching functions; wage offer distribution; unemployment;
Other versions of this item:
- Petrongolo, Barbara & Pissarides, Christopher A., 2003. "Scale Effects in Markets with Search," IZA Discussion Papers 691, Institute for the Study of Labor (IZA).
- Petrongolo, Barbara & Pissarides, Christopher, 2002. "Scale Effects in Markets with Search," CEPR Discussion Papers 3648, C.E.P.R. Discussion Papers.
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
This paper has been announced in the following NEP Reports:
- NEP-ALL-2003-12-07 (All new papers)
- NEP-LAB-2003-12-07 (Labour Economics)
- NEP-MIC-2003-12-07 (Microeconomics)
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