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.
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International Economic Review, 2011, 52(1), pp 85-104. With M. Galenianos and G. Virag. [technical appendix] In directed search with a finite population, minimum wages improve employment but reduce output and efficiency, and reverse for unemployment benefits. Go to paper
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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
Review of Economic Studies, 2019 86(4): 1411-1447. With Michèle Belot and Paul Muller. We develop and evaluate experimentally a novel tool that redesigns the job search process by providing tailored online advice about related occupations. Go to paper
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Journal of Political Economy, 2009, Vol. 117(5), pp. 861- 913. In a directed search where workers apply for multiple jobs and are then allocated via a stable matching, efficiency arises at all stages. Go to paper
Econometrica, 2015, Vol 83 (5), 1849-1875. With K. Kim. [online appendix] We introduce cheap-talk into a market game and study if the equilibrium can replicate the constraint efficient allocation under (reserve) price posting. Go to paper
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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
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Review of Economic Studies, 2015, Vol 82 (2), 659-692. With Fane Groes and Iourii Manovskii. Occupational mobility is highest for high and low earners, and the former move “up” and the latter “down” as in models of vertical re-sorting. Go to paper
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Econometrica. 2018 86(1): 85-132. With Jan Eeckhout. When heterogeneous firms can choose both how many and which workers to hire, we illustrate consequences for firm-size and wage inequality. Note a correction for the condition with capital: corrigendum. Go to paper