NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Cross Sectional Efficiency and Labor Hoarding in an Matching Model of Unemployment

Giuseppe Bertola, Ricardo J. Caballero

NBER Working Paper No. 4472
Issued in September 1993
NBER Program(s):   EFG

We study positive and normative aspects of steady-state equilibrium in a market where firms of endogenous size experience idiosyncratic shocks and undergo a costly search process to hire their workers. The stylized model we propose highlights interactions between job-security provisions and sectoral shocks in determining the natural rate of unemployment, the allocation of labor, and the extent of labor hoarding, and rationalizes cross-sectional asymmetries of gross employment flows at the firm level. In our model, where productivity and search costs are dynamically heterogeneous across firms, decentralized wage bargains imply important cross-sectional inefficiencies, which overshadow the static search inefficiencies on which simpler models focus.

download in pdf format
   (2151 K)

download in djvu format
   (267 K)

email paper

This paper is available as PDF (2151 K) or DjVu (267 K) (Download viewer) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w4472

Published: Review of Economic Studies, vol 61, no 3, pp 435-456, July 1994 citation courtesy of

Users who downloaded this paper also downloaded these:
Burnside, Eichenbaum, and Rebelo w3556 Labor Hoarding and the Business Cycle
Mussa The Theory of Exchange Rate Determination
Caballero, Engel, and Haltiwanger w5042 Aggregate Employment Dynamics: Building From Microeconomic Evidence
Bertola and Ichino Wage Inequality and Unemployment: United States versus Europe
Burnside and Eichenbaum w4675 Factor Hoarding and the Propagation of Business Cycles Shocks
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us