AbstractThis paper examines efficient and equilibrium allocations in an economy where agents with diverse characteristics are matched through a time-consuming process to produce output. This is cast in a labour market where workers of different skills match with machines of different qualities. The efficient assignment is not always positively assortative and can be decentralized by a competitive mechanism where firms compete by posting wages and committing to the skill that their chosen machines are intended for. Implications on wage inequality are examined.
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Bibliographic InfoPaper provided by Queen's University, Department of Economics in its series Working Papers with number 988.
Length: 44 pages
Date of creation: Nov 1998
Date of revision:
Matching; Efficiency; Frictions; Skills: Wage inequality;
Other versions of this item:
- D33 - Microeconomics - - Distribution - - - Factor Income Distribution
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
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- Sattinger, Michael, 1995. "Search and the Efficient Assignment of Workers to Jobs," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 36(2), pages 283-302, May.
- Boyan Jovanovic, 1998.
"Vintage Capital and Inequality,"
Review of Economic Dynamics,
Elsevier for the Society for Economic Dynamics, vol. 1(2), pages 497-530, April.
- Benoit Julien & John Kennes & Ian King, 2000.
"Bidding for Labor,"
Review of Economic Dynamics,
Elsevier for the Society for Economic Dynamics, vol. 3(4), pages 619-649, October.
- Hosios, Arthur J, 1990. "On the Efficiency of Matching and Related Models of Search and Unemployment," Review of Economic Studies, Wiley Blackwell, vol. 57(2), pages 279-98, April.
- Acemoglu, Daron & Shimer, Robert, 1999.
"Holdups and Efficiency with Search Frictions,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(4), pages 827-49, November.
- Mortensen, Dale T, 1982. "Property Rights and Efficiency in Mating, Racing, and Related Games," American Economic Review, American Economic Association, vol. 72(5), pages 968-79, December.
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