Cross Sectional Efficiency and Labor Hoarding in an Matching Model of Unemployment
We study positive and normative aspects of steady-state equilibrium in a market where firms of endogenous size experience idiosyncratic shocks and undergo a costly search process to hire their workers. The stylized model we propose highlights interactions between job-security provisions and sectoral shocks in determining the natural rate of unemployment, the allocation of labor, and the extent of labor hoarding, and rationalizes cross-sectional asymmetries of gross employment flows at the firm level. In our model, where productivity and search costs are dynamically heterogeneous across firms, decentralized wage bargains imply important cross-sectional inefficiencies, which overshadow the static search inefficiencies on which simpler models focus.
|Date of creation:||Sep 1993|
|Date of revision:|
|Publication status:||published as Review of Economic Studies, vol 61, no 3, pp 435-456, July 1994|
|Contact details of provider:|| Postal: |
Web page: http://www.nber.org
More information through EDIRC
This item is featured on the following reading lists or Wikipedia pages:
When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:4472. See general information about how to correct material in RePEc.
If references are entirely missing, you can add them using this form.