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Efficiency and specialization: A search theoretic approach

  • Eleftheriou, Konstantinos

An extension of the traditional Roy model to incorporate the existence of search frictions is proposed. The efficiency of model is then tested under the existence of the standard Hosios condition. The results show that a new kind of externality which is related to the degree of job specialization arises and therefore Hosios condition fails to guarantee efficiency. Policies which subsidize employment and aim at job specialization of individuals, will equate the social with the private market outcome.

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File URL: http://www.sciencedirect.com/science/article/B6VB1-51D895M-1/2/5df1f91c616bf195699400bd6b47df4c
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Article provided by Elsevier in its journal Economic Modelling.

Volume (Year): 28 (2011)
Issue (Month): 1-2 (January)
Pages: 229-238

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Handle: RePEc:eee:ecmode:v:28:y:2011:i:1-2:p:229-238
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/30411

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