Efficient Firm Dynamics in a Frictional Labor Market

Leo Kaas and Philipp Kircher

American Economic Review, 2015, vol. 105, issue 10, 3030-60

Abstract: We develop and analyze a labor market model in which heterogeneous firms operate under decreasing returns and compete for labor by posting long-term contracts. Firms achieve faster growth by offering higher lifetime wages, which allows them to fill vacancies with higher probability, consistent with recent empirical findings. The model also captures several other regularities about firm size, job flows, and pay, and generates sluggish aggregate dynamics of labor market variables. In contrast to existing bargaining models with large firms, efficiency obtains and the model allows a tractable characterization over the business cycle. (JEL E24, J64, L11)

JEL-codes: E24 J64 L11 (search for similar items in EconPapers)
Date: 2015
Note: DOI: 10.1257/aer.20131702
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Citations: View citations in EconPapers (126)

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Related works:
Working Paper: Efficient Firm Dynamics in a Frictional Labor Market (2015)
Working Paper: Efficient firm dynamics in a frictional labor market (2013)
Working Paper: Efficient Firm Dynamics in a Frictional Labor Market (2011)
Working Paper: Efficient Firm Dynamics in a Frictional Labor Market (2011)
Working Paper: Efficient Firm Dynamics in a Frictional Labor Market (2011)
Working Paper: Efficient Firm Dynamics in a Frictional Labor Market (2010)
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