Product market and the size-wage differential

• 成果类型: Article
• 署名作者: Shi, SY
• 署名单位: Indiana University System; Indiana University Bloomington
• 刊物名称: INTERNATIONAL ECONOMIC REVIEW
• ISSN/ISSBN: 0020-6598
• DOI: 10.1111/1468-2354.t01-1-00002
• 发表日期: 2002
• 页码: 21-54
• 关键词: employer size; equilibrium; dispersion; price; demand

摘要

Using directed search to model the product market and the labor market, I show that large plants can pay higher wages to homogeneous workers and earn higher expected profit per worker than small plants, although plants are identical except size. A large plant charges a higher price for its product and compensates buyers with a higher service probability. To capture this size-related benefit, large plants try to become larger by recruiting at high wages. This size-wage differential survives labor market competition because a high wage is harder to get than a low wage. Moreover, the size-wage differential increases with the product demand when demand is initially low and falls when demand is already high.