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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 |
Appears in Collections: | Staff Publications |
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