Efficient Firm Dynamics in a Frictional Labor Market
By Leo Kaas, Philipp Kircher. Social Science Research Network, 2015
211 citations recorded by the source corpus.
The introduction of firm size into labor search models raises the question how wages are set when average and marginal product differ. We develop and analyze an alternative to the existing bargaining framework: Firms compete for labor by publicly posting long–term contracts. In such a competitive search setting, firms achieve faster growth not only by posting more vacancies, but also by offering higher lifetime wages that attract more workers which allows to fill vacancies with higher probability, consistent with empirical regularities. The model also captures several other observations about firm size, job flows, and pay. In contrast to bargaining models, efficiency obtains on all margins of job creation and destruction, both with idiosyncratic and aggregate shocks. The planner solution allows a tractable characterization which is useful for computational applications.
Subfields: Economics and Econometrics
View Paper: https://www.semanticscholar.org/paper/3da56f23d4b7c78bd494ed3b9bb7f02ebe21c8e2
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In Economics and Econometrics
- Jeremy Lise
- Pierre Cahuc
- J. Robin
- Stéphane Carcillo
- Petr Sedlácek
- Edouard Schaal
- T. L. Barbanchon
- Vincent Sterk
Citations in the corpus
- The growth potential of startups over the business cycle (2014, background): “Cooper, Haltiwanger, and Willis (2007) and Kaas and Kircher (2011) for an extensive discussion.”
- The Macrodynamics of Sorting between Workers and Firms (2013, background): “Shi (2010a), Menzio and Shi (2010b), Menzio and Shi (2011), Moscarini and Postel-Vinay (Forthcoming), Coles and Mortensen (2012), Kaas and Kircher (2011), Schaal (2012), Carrillo-Tudela and Visshers (2012), Robin (2011), Lise, Meghir, and Robin (2013), Shimer and Smith (2000), Shimer (2005), Hagedor”
- The Effectiveness of Hiring Credits (2019, methodology): “In line with Kitao et al. (2010) and Kaas and Kircher (2015), we nd that the (one-o¤, non-expected) temporary nature of hiring credits plays a key role: permanent hiring credits, even targeted at a small subset of rms, create jobs at a cost multiplied by a factor of four compared with one-o¤ non-a”
- Uncertainty and Unemployment (2017, methodology): “By assuming that workers are homogeneous and cannot search on the job, Kaas and Kircher (2011) obtain this indifference condition on the worker side.”