Open AccessScale Effects in Markets with Search *
Author(s) -
Petrongolo Barbara,
Pissarides Christopher
Publication year - 2006
Publication title -
the economic journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 4.683
H-Index - 160
eISSN - 1468-0297
pISSN - 0013-0133
DOI - 10.1111/j.1468-0297.2006.01046.x
Subject(s) - scale (ratio) , economics , library science , economic history , regional science , sociology , geography , computer science , cartography
Estimates of aggregate matching functions may miss important scale effects in frictional labour markets because of the reactions of job seekers to scale. We estimate a semi‐structural model of search and matching on a British sample of unemployed people, testing for scale effects on the probability of receiving an offer and on the distribution of wage offers. We find them only in wage offers but we also find that reservation wages rise to deliver higher post‐unemployment wages but not faster matches. So aggregate matching functions should be unaffected by scale but wage equations should be showing them.