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A theory of production, matching, and distribution

Sephorah Mangin ()

Journal of Economic Theory, 2017, vol. 172, issue C, 376-409

Abstract: This paper develops a search-theoretic model of the labor market in which heterogeneous firms compete directly to hire unemployed workers. This process of direct competition simultaneously determines both the expected match output and workers' effective bargaining power. The framework delivers a unified aggregate production and matching technology, and firms are paid both productivity rents and matching rents. Both the curvature of the endogenous production technology and the distribution of output between workers and firms are influenced by properties of the underlying firm productivity distribution, particularly the tail index (a measure of tail fatness). For example, if the firm productivity distribution is Pareto, the labor share is decreasing in its tail index if the value of matching rents is not too high.

Keywords: Competing auctions; Directed search; Competitive search; Aggregate production function; Factor shares; Labor share; Bargaining power (search for similar items in EconPapers)
JEL-codes: E23 E24 E25 J64 (search for similar items in EconPapers)
Date: 2017
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Working Paper: A Theory of Production, Matching, and Distribution (2015) Downloads
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DOI: 10.1016/j.jet.2017.09.009

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