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Search externalities with crowding-out effects


  • Bruno Decreuse

    () (GREQAM and University of Aix-Marseilles)


We consider a static search model with two types of workers, Nash bargaining, and free entry of firms. The matching function is specified so as cross-type congestion effects are asymmetric. Skilled workers create congestion effects for all, while unskilled workers do not affect the odds of employment 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 labor demand effect. The former (latter) effect dominates whenever the skill differential is small (large).

Suggested Citation

  • Bruno Decreuse, 2010. "Search externalities with crowding-out effects," Economics Bulletin, AccessEcon, vol. 30(4), pages 2751-2758.
  • Handle: RePEc:ebl:ecbull:eb-09-00387

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    References listed on IDEAS

    1. Dustmann, Christian & Rochina-Barrachina, María Engracia, 2000. "Selection Correction in Panel Data Models: An Application to Labour Supply and Wages," IZA Discussion Papers 162, Institute for the Study of Labor (IZA).
    2. Keeler, Emmett B & Newhouse, Joseph P & Phelps, C E, 1977. "Deductibles and the Demand for Medical Care Services: The Theory of a Consumer Facing a Variable Price Schedule under Uncertainty," Econometrica, Econometric Society, vol. 45(3), pages 641-655, April.
    3. Christian Dustmann & María Engracia Rochina-Barrachina, 2007. "Selection correction in panel data models: An application to the estimation of females' wage equations," Econometrics Journal, Royal Economic Society, vol. 10(2), pages 263-293, July.
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    More about this item


    matching frictions; heterogeneity; congestion effects;

    JEL classification:

    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers


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