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Directed search and job rotation

Author

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  • Li, Fei
  • Tian, Can

Abstract

We consider the impact of job rotation in a directed search model in which firm sizes are endogenously determined and match quality is initially unknown. A large firm benefits from the opportunity to rotate workers so as to partially overcome the loss of mismatch. As a result, in the unique symmetric equilibrium, large firms have higher labor productivity and lower separation rates. In contrast to the standard directed search model with multi-vacancy firms, this model can generate a positive correlation between firm size and wage without introducing any ex ante productivity differences or imposing any non-concave production function assumptions.

Suggested Citation

  • Li, Fei & Tian, Can, 2013. "Directed search and job rotation," Journal of Economic Theory, Elsevier, vol. 148(3), pages 1268-1281.
  • Handle: RePEc:eee:jetheo:v:148:y:2013:i:3:p:1268-1281
    DOI: 10.1016/j.jet.2012.10.004
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    1. Serene Tan, 2012. "Directed Search And Firm Size," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 53(1), pages 95-113, February.
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    8. Peters, Michael, 1991. "Ex Ante Price Offers in Matching Games Non-steady States," Econometrica, Econometric Society, vol. 59(5), pages 1425-1454, September.
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    Cited by:

    1. repec:eee:eecrev:v:98:y:2017:i:c:p:424-441 is not listed on IDEAS
    2. Sheng Bi & Yuanyuan Li, 2016. "Holdup and hiring discrimination with search friction," Documents de travail du Centre d'Economie de la Sorbonne 16002, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    3. Sheng Bi & Yuanyuan Li, 2016. "Holdup and hiring discrimination with search friction," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01277548, HAL.
    4. repec:eee:jetheo:v:174:y:2018:i:c:p:184-223 is not listed on IDEAS
    5. repec:hal:journl:halshs-01277548 is not listed on IDEAS
    6. Hartmut Egger & Michael Koch, 2013. "Trade and the Firm-Internal Allocation of Workers to Tasks," Working Papers 139, Bavarian Graduate Program in Economics (BGPE).
    7. Ueno, Yuko, 2014. "Size-specific Effects in Job Reallocation and Worker Mobility: Japan’s Experience from the 1990s," CIS Discussion paper series 624, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University.
    8. Kuznetsov, Andrei & Dinwoodie, John & Gibbs, David & Sansom, Mark & Knowles, Harriet, 2015. "Towards a sustainability management system for smaller ports," Marine Policy, Elsevier, vol. 54(C), pages 59-68.
    9. BI, Sheng & LI, Yuanyuan, 2015. "Holdup and hiring discrimination with search friction," MPRA Paper 65100, University Library of Munich, Germany.

    More about this item

    Keywords

    Directed search; Job rotation; Firm size and wage; Firm size and labor productivity;

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • 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

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