Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
957209 | Journal of Economic Theory | 2013 | 14 Pages |
Abstract
We consider the impact of job rotation in a directed search model in which firm sizes are endogenously determined and match quality is initially unknown. A large firm benefits from the opportunity to rotate workers so as to partially overcome the loss of mismatch. As a result, in the unique symmetric equilibrium, large firms have higher labor productivity and lower separation rates. In contrast to the standard directed search model with multi-vacancy firms, this model can generate a positive correlation between firm size and wage without introducing any ex ante productivity differences or imposing any non-concave production function assumptions.
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Authors
Fei Li, Can Tian,