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Granular Search, Market Structure, and Wages

Author

Listed:
  • Gregor Jarosch

    (Princeton University and NBER)

  • Jan Sebastian Nimczik

    (ESMT Berlin and IZA)

  • Isaac Sorkin

    (Stanford University and NBER)

Abstract

We develop a model where labor market structure affects the division of surplus between firms and workers. In a model of random search and large employers, workers might apply to another job controlled by the same employer in the future. This possibility endows firms with size-based market power. The reason is that 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. We calibrate the model to Austrian data and find that such size-based market power depresses wages.

Suggested Citation

  • Gregor Jarosch & Jan Sebastian Nimczik & Isaac Sorkin, 2021. "Granular Search, Market Structure, and Wages," Working Papers 2021-38, Princeton University. Economics Department..
    • Handle: RePEc:pri:econom:2021-38
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    References listed on IDEAS

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    More about this item

    Keywords

    labor market; labor economics;

    JEL classification:

    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General

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