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Search externalities with crowding-out effects

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Author Info
Decreuse, Bruno

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Abstract

We propose a static search model with two types of workers, output sharing (Nash bargaining), and free entry of firms. The matching function is specified so as the unskilled do not create congestion effects for the skilled. An increase in the share of skilled workers has two effects on the welfare of the unskilled: a negative crowding-out effect, and a positive labour demand effect. The former (latter) effect dominates whenever the skill differential is small (large).

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File URL: http://mpra.ub.uni-muenchen.de/6949/
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Publisher Info
Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 6949.

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Date of creation: Jan 2008
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Handle: RePEc:pra:mprapa:6949

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Related research
Keywords: Matching frictions Heterogeneity Congestion effects

Find related papers by JEL classification:
J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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This page was last updated on 2008-7-26.


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