Job Search with Organizational Size As a Signal

Abstract

It is in workers' interest to leave their jobs if better work can be found, but imperfect information on outside opportunities impedes their job search. We describe two theories on workers' search using the organizational size as a proxy for work characteristics and derive hypotheses on how the organizational size distribution in a labor market affects job separations. We test the hypotheses with NLSY 79 data on job separations, finding that diversity in organizational sizes affects worker mobility. Workers are more likely to move within counties with many organizations larger than their current one or many organizations of different sizes and are more likely to leave counties lacking these characteristics.