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Preference Signaling in Matching Markets

  • Peter Coles
  • Alexey Kushnir
  • Muriel Niederle

Many labor markets share three stylized facts: employers cannot give full attention to all candidates, candidates are ready to provide information about their preferences for particular employers, and employers value and are prepared to act on this information. In this paper we study how a signaling mechanism, where each worker can send a signal of interest to one employer, facilitates matches in such markets. We find that introducing a signaling mechanism increases the welfare of workers and the number of matches, while the change in firm welfare is ambiguous. A signaling mechanism adds the most value for balanced markets. (JEL C78)

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/mic.5.2.99
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File URL: http://www.aeaweb.org/aej/mic/app/2012-0012_app.pdf
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Article provided by American Economic Association in its journal American Economic Journal: Microeconomics.

Volume (Year): 5 (2013)
Issue (Month): 2 (May)
Pages: 99-134

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Handle: RePEc:aea:aejmic:v:5:y:2013:i:2:p:99-134
Note: DOI: 10.1257/mic.5.2.99
Contact details of provider: Web page: https://www.aeaweb.org/aej-micro
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References listed on IDEAS
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  1. Atila Abdulkadiroğlu & Yeon-Koo Che & Yosuke Yasuda, 2010. "Expanding “Choice” in School Choice," Levine's Working Paper Archive 661465000000000062, David K. Levine.
  2. Alexey Kushnir, 2010. "Harmful signaling in matching markets," IEW - Working Papers 509, Institute for Empirical Research in Economics - University of Zurich.
  3. Heidrun C. Hoppe & Benny Moldovanu & Aner Sela, 2009. "The Theory of Assortative Matching Based on Costly Signals," Review of Economic Studies, Oxford University Press, vol. 76(1), pages 253-281.
  4. Roth, Alvin E & Xing, Xiaolin, 1997. "Turnaround Time and Bottlenecks in Market Clearing: Decentralized Matching in the Market for Clinical Psychologists," Journal of Political Economy, University of Chicago Press, vol. 105(2), pages 284-329, April.
  5. Christopher A. Pissarides, 2000. "Equilibrium Unemployment Theory, 2nd Edition," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262161877, December.
  6. 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.
  7. Coles, Peter Andrew & Levine, Phillip B. & Roth, Alvin E. & Cawley, John & Niederle, Muriel & Siegfried, John J., 2010. "The Job Market for New Economists: A Market Design Perspective," Scholarly Articles 5343168, Harvard University Department of Economics.
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