Granular Search, Market Structure, and Wages / Gregor Jarosch, Jan Sebastian Nimczik, Isaac Sorkin.

Format:

Book

Author/Creator:

Jarosch, Gregor.

Contributor:

National Bureau of Economic Research.

Nimczik, Jan Sebastian.

Sorkin, Isaac.

Series:

Working Paper Series (National Bureau of Economic Research) no. w26239.

NBER working paper series no. w26239

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2019.

Summary:

We develop a model where labor market structure affects the division of surplus between firms and workers. Using Austrian data we show that in more concentrated labor markets, workers are more likely to return to past employers. In our model, the possibility of these re-encounters endows firms with size-based market power since outside options are truly outside the firm: firms do not compete with their own vacancies. Hence, a worker's outside option is worse when bargaining with a larger firm, and wages depend on market structure. The quantified model suggests that such size-based market power could substantially reduce wages.

Notes:

Print version record

September 2019.