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Search externalities and management policies

Author

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  • Maxime Liégey

    (Université de Strasbourg)

Abstract

How can externalities in the labor market interact with firms' adoption of Human Resource Management (HRM) policies ? I build a search-and-matching model in which managers supervise teams of workers and intervene in the output process, in order to account for the equilibrium determination of managers' choice between labor-hoarding versus labor-churning HRM policies. I show that, if congestion externalities on workers' side are strong enough, they are willing to accept moderate wages provided the job-finding rate is high enough. This induces managers to adopt labor-hoarding HRM policies, which fosters manager entry into the market. The model thus establishes a testable result, namely, a positive relationship between the strength of congestion externalities on workers' side, and firms' propensity to adopt labor-hoarding HRM policies.

Suggested Citation

  • Maxime Liégey, 2021. "Search externalities and management policies," Economics Bulletin, AccessEcon, vol. 41(4), pages 2206-2215.
    • Handle: RePEc:ebl:ecbull:eb-21-01166
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    File URL: http://www.accessecon.com/Pubs/EB/2021/Volume41/EB-21-V41-I4-P189.pdf
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    More about this item

    Keywords

    Search-and-Matching; Human Resource Management Policies; Worker Turnover;
    All these keywords.

    JEL classification:

    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior

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