Directed search and job rotation

Fei Li and Can Tian

MPRA Paper from University Library of Munich, Germany

Abstract: In this note, we consider the impact of job rotation in a directed search model in which firm sizes are endogenously determined, and match quality is initially unknown. A large firm benefits from the opportunity of rotating workers so as to partially overcome mismatch loss. As a result, in the unique symmetric subgame perfect equilibrium, large firms have higher labor productivity and lower separation rate. In contrast to the standard directed search model with multi-vacancy firms, this model can generate a positive correlation between firm size and wage without introducing any exogenous productivity shock or imposing non-concave production function assumption.

Keywords: Directed Search; Job Rotation; Firm Size and Wage; Firm Size and Labor Productivity (search for similar items in EconPapers)
JEL-codes: J31 J64 L11 (search for similar items in EconPapers)
Date: 2011-10-04
New Economics Papers: this item is included in nep-dge and nep-lab
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:33875

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