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Contracts versus Salaries in Matching

Author

Listed:
  • 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)

Suggested Citation

  • Federico Echenique, 2012. "Contracts versus Salaries in Matching," American Economic Review, American Economic Association, vol. 102(1), pages 594-601, February.
  • Handle: RePEc:aea:aecrev:v:102:y:2012:i:1:p:594-601
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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/aer.102.1.594
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    References listed on IDEAS

    as
    1. 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.
    2. John William Hatfield & Paul R. Milgrom, 2005. "Matching with Contracts," American Economic Review, American Economic Association, vol. 95(4), pages 913-935, September.
    3. Roth, Alvin E, 1984. "Stability and Polarization of Interests in Job Matching," Econometrica, Econometric Society, vol. 52(1), pages 47-57, January.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. repec:eee:gamebe:v:107:y:2018:i:c:p:41-59 is not listed on IDEAS
    2. Umut M. Dur & Scott Duke Kominers & Parag A. Pathak & Tayfun Sönmez, 2013. "The Demise of Walk Zones in Boston: Priorities vs. Precedence in School Choice," NBER Working Papers 18981, National Bureau of Economic Research, Inc.
    3. Tayfun Sönmez, 2013. "Bidding for Army Career Specialties: Improving the ROTC Branching Mechanism," Journal of Political Economy, University of Chicago Press, vol. 121(1), pages 186-219.
    4. Echenique, Federico & Galichon, Alfred, 2017. "Ordinal and cardinal solution concepts for two-sided matching," Games and Economic Behavior, Elsevier, vol. 101(C), pages 63-77.
    5. 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.
    6. Hirata, Daisuke & Kasuya, Yusuke, 2017. "On stable and strategy-proof rules in matching markets with contracts," Journal of Economic Theory, Elsevier, vol. 168(C), pages 27-43.
    7. 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.
    8. Jan Christoph Schlegel, 2013. "Contracts versus Salaries in Matching: Comment. N.B.: This paper is replaced by Nr 14.05 "Contracts versus Salaries in Matching: A General Result" (August 2014)," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 13.09, Université de Lausanne, Faculté des HEC, DEEP.
    9. Schlegel, Jan Christoph, 2015. "Contracts versus salaries in matching: A general result," Journal of Economic Theory, Elsevier, vol. 159(PA), pages 552-573.
    10. 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.
    11. Elizabeth Baldwin & Paul Klemperer, 2015. "Understanding Preferences: “Demand Types”, and the Existence of Equilibrium with Indivisibilities," Economics Papers 2015-W10, Economics Group, Nuffield College, University of Oxford.
    12. Kadam, Sangram Vilasrao, 2017. "Unilateral substitutability implies substitutable completability in many-to-one matching with contracts," Games and Economic Behavior, Elsevier, vol. 102(C), pages 56-68.
    13. 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.
    14. Alcalde, José, 2017. "Beyond the Spanish MIR with Consent: (Hidden) Cooperation and Coordination in Matching," QM&ET Working Papers 17-1, University of Alicante, D. Quantitative Methods and Economic Theory.
    15. 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.
    16. Andersson, Tommy & Svensson, Lars-Gunnar, 2018. "Sequential rules for house allocation with price restrictions," Games and Economic Behavior, Elsevier, vol. 107(C), pages 41-59.

    More about this item

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts

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