We develop and analyze a labor market model in which heterogeneous firms operate under decreasing returns and compete for labor by posting long-term contracts. Firms achieve faster growth by offering higher lifetime wages, which allows them to fill vacancies with higher probability, consistent with recent empirical findings. The model also captures several other regularities about firm size, job flows and pay, and generates sluggish aggregate dynamics of labor market variables. In contrast to existing bargaining models with large firms, efficiency obtains and the model allows a tractable characterization over the business cycle.
Efficient Firm Dynamics in a Frictional Labor Market
American Economic Review, 2015, Vol 105 (10), 3030-3060. With Leo Kaas.
We propose a tractable competitive search model with heterogeneous multi-worker firms, and investigate firm growth and business cycles.
Journal of Economic Theory, 2009, 114(2), pp. 445-471. With Manolis Galenianos. We study wage dispersion and (in)efficiency in directed search when workers can strategically apply for multiple jobs but firms can only make one offer. Go to paper
American Economic Journal - Macroeconomics, forthcoming 2022, with Michèle Belot and Paul Muller. In a field experiment, we study how job seekers respond to posted wages by assigning wages randomly to pairs of otherwise similar vacancies in a large number of professions. Higher wages attract significantly more interest, but still a non-trivial number of applicants only reveal an interest in the low wage vacancy - qualitatively in line with a directed search model with multiple applications and on-the-job search. Go to paper
Quarterly Journal of Economics, 2008/123(2), pp. 621-661. With A. Postlewaite. [technical appendix] In a model of social learning, the better informed (wealthier) consumers get preferential service because their consumption signals high quality to others. Go to paper
B.E. Journals of Theoretical Economics, 2013, Vol 13 (1). With S. Ludwig and A. Sandroni. We document a revealed preference for randomization for “social goods”, while such non-standard behavior is not present for private consumption goods. Go to paper
International Economic Review, 2012, Vol 53 (1), 1-21. With M. Galenianos. We study a finite directed-search wage posting game among heterogeneous firms (allowing for risk aversion, moral hazard,…), including limit theorems. Go to paper
Journal of Economic Theory, 2010/145, 1354-1385. With Jan Eeckhout. Search affects competing mechanisms: if meetings with low types reduce those of high types, price posting and market separation replace auctions. Go to paper