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A theory of production, matching, and distribution

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  • Mangin, Sephorah

Abstract

This paper develops a search-theoretic model of the labor market in which heterogeneous firms compete directly to hire unemployed workers. This process of direct competition simultaneously determines both the expected match output and workers' effective bargaining power. The framework delivers a unified aggregate production and matching technology, and firms are paid both productivity rents and matching rents. Both the curvature of the endogenous production technology and the distribution of output between workers and firms are influenced by properties of the underlying firm productivity distribution, particularly the tail index (a measure of tail fatness). For example, if the firm productivity distribution is Pareto, the labor share is decreasing in its tail index if the value of matching rents is not too high.

Suggested Citation

  • Mangin, Sephorah, 2017. "A theory of production, matching, and distribution," Journal of Economic Theory, Elsevier, vol. 172(C), pages 376-409.
    • Handle: RePEc:eee:jetheo:v:172:y:2017:i:c:p:376-409
    DOI: 10.1016/j.jet.2017.09.009
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    Cited by:

    1. Johannes Boehm, 2014. "The Impact of Contract Enforcement Costs on Outsourcing and Aggregate Productivity," 2014 Meeting Papers 340, Society for Economic Dynamics.
    2. Ezra Oberfield & Devesh Raval, 2021. "Micro Data and Macro Technology," Econometrica, Econometric Society, vol. 89(2), pages 703-732, March.
    3. Mangin, Sephorah & Sedláček, Petr, 2018. "Unemployment and the labor share," Journal of Monetary Economics, Elsevier, vol. 94(C), pages 41-59.
    4. Mangin, Sephorah & Julien, Benoît, 2021. "Efficiency in search and matching models: A generalized Hosios condition," Journal of Economic Theory, Elsevier, vol. 193(C).
    5. Gabaix, Xavier & Laibson, David & Li, Deyuan & Li, Hongyi & Resnick, Sidney & de Vries, Casper G., 2016. "The impact of competition on prices with numerous firms," Journal of Economic Theory, Elsevier, vol. 165(C), pages 1-24.
    6. Stephen J. DeCanio, 2022. "Simple efficiency-distribution models of production, with an application to robotics," SN Business & Economics, Springer, vol. 2(8), pages 1-16, August.
    7. Johannes Boehm, 2020. "The Impact of Contract Enforcement Costs on Outsourcing and Aggregate Productivity," SciencePo Working papers hal-03566762, HAL.
    8. repec:hal:spmain:info:hdl:2441/185h5h2nvv9lqr7nmeddt9uu5l is not listed on IDEAS
    9. repec:hal:wpspec:info:hdl:2441/1uut5itepl9q5osfl3tj7qatje is not listed on IDEAS
    10. repec:hal:spmain:info:hdl:2441/1uut5itepl9q5osfl3tj7qatje is not listed on IDEAS
    11. DeCanio, Stephen J., 2016. "Robots and humans – complements or substitutes?," Journal of Macroeconomics, Elsevier, vol. 49(C), pages 280-291.
    12. Émilien Gouin‐Bonenfant, 2022. "Productivity Dispersion, Between‐Firm Competition, and the Labor Share," Econometrica, Econometric Society, vol. 90(6), pages 2755-2793, November.

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    More about this item

    Keywords

    Competing auctions; Directed search; Competitive search; Aggregate production function; Factor shares; Labor share; Bargaining power;
    All these keywords.

    JEL classification:

    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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