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https://hdl.handle.net/2440/72627
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Type: | Journal article |
Title: | Directed search and firm size |
Author: | Tan, Serene Sze-Ching |
Citation: | International Economic Review, 2012; 53(1):95-113 |
Publisher: | Univ Penn |
Issue Date: | 2012 |
ISSN: | 0020-6598 |
School/Discipline: | School of Economics |
Statement of Responsibility: | Serene Tan |
Abstract: | Standard directed search models predict that larger firms pay lower wages than smaller firms, contrary to the data. This article proposes one way to obtain this positive size–wage differential in a directed search setting. I posit that there is an optimal size associated with a firm: A firm suffers a penalty by not operating at its optimal size. I show that if this penalty is sufficiently large the size–wage differential will be obtained. My model also gives a new way to look at the data because it highlights the importance of the distinction between intended and realized firm sizes. |
Rights: | © (2012) by the Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association |
DOI: | 10.1111/j.1468-2354.2011.00672.x |
Appears in Collections: | Economics publications |
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