Michelacci, Claudio; Quadrini, Vincenzo - Society for Economic Dynamics - SED - 2004
, they pay lower wages today in exchange of higher future wages. Because firms with tighter financial constraints are also … smaller, the wages paid in small firms are lower than the in large firms, and therefore, the model generates a positive … relation between the size of the firm and the average wages paid to workers (wage-firm size relation). The model also captures …