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Does search boost efficiency?

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  • Ge, Teng

Abstract

Poaching externality, arising from job-to-job turnovers, implies that a planner should allocate fewer resources to costly job creations. However, these search efforts increase competition among employers, and this could in turn internalize the externality, whereas the congestion externality requires a unit-elastic matching function.

Suggested Citation

  • Ge, Teng, 2015. "Does search boost efficiency?," Economics Letters, Elsevier, vol. 130(C), pages 72-74.
    • Handle: RePEc:eee:ecolet:v:130:y:2015:i:c:p:72-74
    DOI: 10.1016/j.econlet.2015.03.006
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    References listed on IDEAS

    as
    1. Christopher A. Pissarides & Barbara Petrongolo, 2001. "Looking into the Black Box: A Survey of the Matching Function," Journal of Economic Literature, American Economic Association, vol. 39(2), pages 390-431, June.
    2. Bent Jesper Christensen & Rasmus Lentz & Dale T. Mortensen & George R. Neumann & Axel Werwatz, 2005. "On-the-Job Search and the Wage Distribution," Journal of Labor Economics, University of Chicago Press, vol. 23(1), pages 31-58, January.
    3. Burdett, Kenneth & Mortensen, Dale T, 1998. "Wage Differentials, Employer Size, and Unemployment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(2), pages 257-273, May.
    4. Christopher A. Pissarides, 2000. "Equilibrium Unemployment Theory, 2nd Edition," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262161877, December.
    5. Rosholm, Michael & Svarer, Michael, 2004. "Endogenous wage dispersion in a search-matching model," Labour Economics, Elsevier, vol. 11(5), pages 623-645, October.
    6. Diamond, Peter A., 1971. "A model of price adjustment," Journal of Economic Theory, Elsevier, vol. 3(2), pages 156-168, June.
    7. Dale T. Mortensen, 2010. "Wage Dispersion in the Search and Matching Model," American Economic Review, American Economic Association, vol. 100(2), pages 338-342, May.
    8. Arthur J. Hosios, 1990. "On The Efficiency of Matching and Related Models of Search and Unemployment," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 57(2), pages 279-298.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Search; Wage setting; Externality;
    All these keywords.

    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis

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