Please use this identifier to cite or link to this item: https://doi.org/10.1111/j.1468-2354.2011.00672.x
Title: Directed search and firm size
Authors: Tan, S. 
Issue Date: Feb-2012
Citation: Tan, S. (2012-02). Directed search and firm size. International Economic Review 53 (1) : 95-113. ScholarBank@NUS Repository. https://doi.org/10.1111/j.1468-2354.2011.00672.x
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. © (2012) by the Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.
Source Title: International Economic Review
URI: http://scholarbank.nus.edu.sg/handle/10635/124298
ISSN: 00206598
DOI: 10.1111/j.1468-2354.2011.00672.x
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