Scale Effects in Markets with Search

Barbara Petrongolo and Christopher Pissarides

No 691, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Reduced-form tests of scale effects in markets with search, run when aggregate matching functions are estimated, may miss important scale effects at the micro level, because of the reactions of job searchers. A semi-structural model is developed and estimated on a British sample, testing for scale effects on the offer arrival rate and the wage offer distribution. When contrasting London with the rest of the country we find scale effects in wage offers. But the larger market delivers higher realized wages and not more matches, because the scale effects on matches are offset by the response of reservation wages.

Keywords: job search; wage offer distribution; unemployment; aggregate matching functions; matching; economies of scale (search for similar items in EconPapers)
JEL-codes: D83 J31 J64 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2003-01
New Economics Papers: this item is included in nep-geo, nep-ind, nep-lab, nep-pke and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Published - published in: Economic Journal, 2006, 116 (508), 21-44

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Related works:
Journal Article: Scale Effects in Markets with Search (2006)
Working Paper: Scale effects in markets with search (2006)
Working Paper: Scale Effects in Markets with Search (2003)
Working Paper: Scale effects in markets with search (2003)
Working Paper: Scale Effects in Markets with Search (2002)
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