EQUILIBRIUM LABOR TURNOVER, FIRM GROWTH, AND UNEMPLOYMENT

This paper considers equilibrium quit turnover in a frictional labor market with costly hiring by firms, where large firms employ many workers and face both aggregate and firm specific productivity shocks. There is exogenous firm turnover as new (small) startups enter the market over time, while som...

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Veröffentlicht in:	Econometrica 2016-01, Vol.84 (1), p.347-363
Hauptverfasser:	Coles, Melvyn G., Mortensen, Dale T.
Format:	Artikel
Sprache:	eng
Schlagworte:	Business growth Employee turnover Equilibrium Labor market Labor turnover Labour market Monopsony NOTES AND COMMENTS stochastic equilibrium Studies Unemployment
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description	This paper considers equilibrium quit turnover in a frictional labor market with costly hiring by firms, where large firms employ many workers and face both aggregate and firm specific productivity shocks. There is exogenous firm turnover as new (small) startups enter the market over time, while some existing firms fail and exit. Individual firm growth rates are disperse and evolve stochastically. The paper highlights how dynamic monopsony, where firms trade off lower wages against higher (endogenous) employee quit rates, yields excessive job-to-job quits. Such quits directly crowd out the reemployment prospects of the unemployed. With finite firm productivity states, stochastic equilibrium is fully tractable and can be computed using standard numerical techniques.
doi_str_mv	10.3982/ECTA10700
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subjects	Business growth Employee turnover Equilibrium Labor market Labor turnover Labour market Monopsony NOTES AND COMMENTS stochastic equilibrium Studies Unemployment
title	EQUILIBRIUM LABOR TURNOVER, FIRM GROWTH, AND UNEMPLOYMENT
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