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Contracts versus Salaries in Matching

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  • Federico Echenique

Abstract

Firms and workers may sign complex contracts that govern many aspects of their interactions. I show that when firms regard contracts as substitutes, bargaining over contracts can be understood as bargaining only over wages. Substitutes is the assumption commonly used to guarantee the existence of stable matchings of workers and firms. (JEL C78, D86, J31, J41)

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/aer.102.1.594
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Bibliographic Info

Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 102 (2012)
Issue (Month): 1 (February)
Pages: 594-601

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Handle: RePEc:aea:aecrev:v:102:y:2012:i:1:p:594-601

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  1. Roth, Alvin E, 1984. "Stability and Polarization of Interests in Job Matching," Econometrica, Econometric Society, vol. 52(1), pages 47-57, January.
  2. Paul Milgrom, 2003. "Matching with Contracts," Working Papers 03003, Stanford University, Department of Economics.
  3. Hatfield, John William & Kojima, Fuhito, 2010. "Substitutes and stability for matching with contracts," Journal of Economic Theory, Elsevier, vol. 145(5), pages 1704-1723, September.
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Cited by:
  1. Kominers, Scott Duke, 2012. "On the correspondence of contracts to salaries in (many-to-many) matching," Games and Economic Behavior, Elsevier, vol. 75(2), pages 984-989.
  2. Tayfun Sönmez, 2011. "Bidding for Army Career Specialties: Improving the ROTC Branching Mechanism," Boston College Working Papers in Economics 783, Boston College Department of Economics.
  3. Orhan Aygün & Tayfun Sönmez, 2012. "Matching with Contracts: The Critical Role of Irrelevance of Rejected Contracts," Boston College Working Papers in Economics 804, Boston College Department of Economics.
  4. Tayfun Sönmez & Tobias B. Switzer, 2011. "Matching with (Branch-of-Choice) Contracts at United States Military Academy," Boston College Working Papers in Economics 782, Boston College Department of Economics.
  5. Orhan Aygün & Tayfun Sönmez, 2012. "The Importance of Irrelevance of Rejected Contracts in Matching under Weakened Substitutes Conditions," Boston College Working Papers in Economics 805, Boston College Department of Economics.
  6. Scott Duke Kominers & Tayfun Sönmez, 2012. "Designing for Diversity: Matching with Slot-Specific Priorities," Boston College Working Papers in Economics 806, Boston College Department of Economics.
  7. Jan Christoph Schlegel, 2013. "Contracts versus Salaries in Matching: Comment," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 13.09, Université de Lausanne, Faculté des HEC, DEEP.

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