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Directed search and job rotation

Author

Listed:
  • Li, Fei
  • Tian, Can

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.

Suggested Citation

  • Li, Fei & Tian, Can, 2011. "Directed search and job rotation," MPRA Paper 33875, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:33875
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Directed Search; Job Rotation; Firm Size and Wage; Firm Size and Labor Productivity;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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