Directed search and firm size
Date
2012
Authors
Tan, Serene Sze-Ching
Editors
Advisors
Journal Title
Journal ISSN
Volume Title
Type:
Journal article
Citation
International Economic Review, 2012; 53(1):95-113
Statement of Responsibility
Serene Tan
Conference Name
Abstract
Standard directed search models predict that larger firms pay lower wages than smaller firms, contrary to the data. This article proposes one way to obtain this positive size–wage differential in a directed search setting. I posit that there is an optimal size associated with a firm: A firm suffers a penalty by not operating at its optimal size. I show that if this penalty is sufficiently large the size–wage differential will be obtained. My model also gives a new way to look at the data because it highlights the importance of the distinction between intended and realized firm sizes.
School/Discipline
School of Economics
Dissertation Note
Provenance
Description
Access Status
Rights
© (2012) by the Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association