Tuesday, March 24, 2020

Granular Search, Concentration and Wages

By: Gregor Jarosch (Princeton University); Isaac Sorkin (Stanford University); Jan Sebastian Nimczik (Humboldt University Berlin)
Abstract: This paper develops an approach to measuring labor market power that builds on the structure of a canonical search model. We relax the common assumption of a continuum of firms and assume that firms can commit not to compete with their own future job openings. This granular extension yields a micro-founded concentration index similar to the Herfindahl and a structural mapping between the index and labor market outcomes. Empirically, we define labor markets based on worker flows and then use our framework to quantify the consequences of market power in the Austrian labor market.
URL: http://d.repec.org/n?u=RePEc:red:sed019:1018&r=com


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