TY  - JOUR
AU  - Bertola,Giuseppe
AU  - Caballero,Ricardo J.
TI  - Cross Sectional Efficiency and Labor Hoarding in an Matching Model of   Unemployment
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 4472
PY  - 1993
Y2  - September 1993
UR  - http://www.nber.org/papers/w4472
L1  - http://www.nber.org/papers/w4472.pdf
N1  - Author contact info:
Giuseppe Bertola
EDHEC
393 promenade des anglais
F-06202 Nice 
E-Mail: giuseppe.bertola@edhec.edu

Ricardo J. Caballero
MIT
Department of Economics
Room E52-373a
Cambridge, MA 02142-1347
Tel: 617/253-0489
Fax: 617/253-6915
E-Mail: caball@mit.edu
AB  - 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.
ER  -