Labor Specialization as a Source of Market Frictions
CEP Discussion Papers from Centre for Economic Performance, LSE
This paper investigates why labor specialization brings additional frictions to the labor market. The intuition is that labor specialized firms rely on complementarity and firm-specific human capital, assigning high value to the worker-employer match. Consistent with employees' importance, the findings show that specialized firms preserve their workforce: these firms labor hoard and increase wages during slow-downs. Additionally, when specialized firms unexpectedly face a labor supply shock | albeit managing to decrease the wages of the remaining co-workers, they become less productive. Overall, the empirical evidence suggests that frictions introduce bilateral monopoly rents.
Keywords: labor specialization; market frictions; division of labor; human capital (search for similar items in EconPapers)
JEL-codes: J24 J42 J63 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-hrm and nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:cep:cepdps:dp1580
Access Statistics for this paper
More papers in CEP Discussion Papers from Centre for Economic Performance, LSE
Bibliographic data for series maintained by ().