Scale Effects in Markets with Search

By Barbara Petrongolo, Christopher Pissarides. Social Science Research Network, 2006

112 citations recorded by the source corpus.

Estimates of aggregate matching functions may miss important scale effects in frictional labour markets because of the reactions of job seekers to scale. We estimate a semi-structural model of search and matching on a British sample of unemployed people, testing for scale effects on the probability of receiving an offer and on the distribution of wage offers. We find them only in wage offers but we also find that reservation wages rise to deliver higher post-unemployment wages but not faster matches. So aggregate matching functions should be unaffected by scale but wage equations should be showing them.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/5596c04952c1030c27f81b1bbc70f7d63467e3bc

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Citations in the corpus

Hot and cold seasons in the housing market (2014, unknown): “See, for example, Diamond (1981), Petrongolo and Pissarides (2006) and Gautier and Teulings (2008). and a match can be made, the seller has to decide whether to keep searching for a better offer or to sell at the potentially lower price.”
The macroeconomic effects of goods and labor markets deregulation (2016, background): “…two alternative values for the matching function elasticity, setting ε equal to 0.7 and 0.4, respectively the upper end of the range of estimates that Petrongolo and Pissarides (2006) report, and the value in Blanchard and Diamond (1989); we also consider higher and lower values for the workers’…”
The Future of Work in the ‘Sharing Economy’. Market Efficiency and Equitable Opportunities or Unfair Precarisation? (2016, unknown): “…and used as complementary background, the article by Autor on ‘wired labour’ (2001) is cited by many of the authors discussed below; it builds on earlier labour economics studies of markets with matching functions and with search (Petrongolo & Pissarides, 2006; Petrongolo & Pissarides, 2001).”
Job search in thick markets (2011, unknown): “…(see Petrongolo and Pissarides (2001) for a review) finds constant returns to scale in the aggregate matching function, possibly because reservation wages adjust to offset the scale effects generated in the contact technology or in the productivity of job matches (Petrongolo and Pissarides, 2006).”
The Cross-country Determinants of Potential and Actual Migration 1 (2014, background): “…and potential opportunities in receiving countries can be described in the context of a "matching" function (as in Pissarides and Petrongolo, 2001; Petrongolo and Pissarides, 2006; or Gregg and Petrongolo, 2005 among others) that summarizes the slow and uncertain process through which potential…”