The Assignment of Workers to Jobs with Endogenous Information Selection
AbstractWe present a model where information processing constraints on workers and firms lead to an endogenous matching function. We provide conditions under which the matching process has a unique equilibrium computable in closed-form. The main finding is that equilibrium matching is generally inefficient. This result does not depend on the form of heterogeneity, the distribution of surplus or bargaining rules. It is driven by information processing constraints which weaken the strategic complementarities and enhance the negative externalities in search efforts of workers and firms. A closed-form solution of the model provides a bound on the size of this inefficiency.
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Bibliographic InfoPaper provided by Society for Economic Dynamics in its series 2012 Meeting Papers with number 164.
Date of creation: 2012
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Postal: Society for Economic Dynamics Christian Zimmermann Economic Research Federal Reserve Bank of St. Louis PO Box 442 St. Louis MO 63166-0442 USA
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-01-07 (All new papers)
- NEP-DGE-2013-01-07 (Dynamic General Equilibrium)
- NEP-MIC-2013-01-07 (Microeconomics)
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