Search externalities and management policies

Maxime Liégey ()
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Maxime Liégey: Université de Strasbourg

Economics Bulletin, 2021, vol. 41, issue 4, 2206-2215

Abstract: How can externalities in the labor market interact with firms' adoption of Human Resource Management (HRM) policies ? I build a search-and-matching model in which managers supervise teams of workers and intervene in the output process, in order to account for the equilibrium determination of managers' choice between labor-hoarding versus labor-churning HRM policies. I show that, if congestion externalities on workers' side are strong enough, they are willing to accept moderate wages provided the job-finding rate is high enough. This induces managers to adopt labor-hoarding HRM policies, which fosters manager entry into the market. The model thus establishes a testable result, namely, a positive relationship between the strength of congestion externalities on workers' side, and firms' propensity to adopt labor-hoarding HRM policies.

Keywords: Search-and-Matching; Human Resource Management Policies; Worker Turnover (search for similar items in EconPapers)
JEL-codes: J6 L2 (search for similar items in EconPapers)
Date: 2021-12-29
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