Large firms and within firm occupational reallocation

This paper considers the equilibrium interaction between within firm and across firm reallocation in the presence of labor market frictions. While a sizable literature has investigated frictional labor markets, it has ignored within firm mobility. Nonetheless, every year a sizable fraction of workers switch occupations without changing firms. Employees in large firms can sample from a larger selection and across firm mobility is replaced by within firm mobility. Bringing together within and across firm reallocation along with labor market frictions, naturally accounts for the observed differences in worker flows and wages across firms of different sizes.