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Matching workers to firms facing budget constraints

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  • Ahmadzadeh, Amirreza
  • Shahdadi, Behrang Kamali

Abstract

We study a many-to-one matching model with salaries in which firms face budget constraints. Mongell and Roth (1986) show that when firms face a budget constraint, a stable matching may not exist. We introduce an algorithm to find a strong stable matching by changing the budget of firms such that the total budget remains the same and each firm’s budget change is bounded by the value of at most one worker for that firm.

Suggested Citation

  • Ahmadzadeh, Amirreza & Shahdadi, Behrang Kamali, 2024. "Matching workers to firms facing budget constraints," Economics Letters, Elsevier, vol. 245(C).
    • Handle: RePEc:eee:ecolet:v:245:y:2024:i:c:s0165176524005329
    DOI: 10.1016/j.econlet.2024.112048
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    References listed on IDEAS

    as
    1. Mongell, Susan J. & Roth, Alvin E., 1986. "A note on job matching with budget constraints," Economics Letters, Elsevier, vol. 21(2), pages 135-138.
    2. Thành Nguyen & Rakesh Vohra, 2018. "Near-Feasible Stable Matchings with Couples," American Economic Review, American Economic Association, vol. 108(11), pages 3154-3169, November.
    3. Kelso, Alexander S, Jr & Crawford, Vincent P, 1982. "Job Matching, Coalition Formation, and Gross Substitutes," Econometrica, Econometric Society, vol. 50(6), pages 1483-1504, November.
    4. Faruk Gul & Wolfgang Pesendorfer & Mu Zhang, 2024. "Efficient Allocation of Indivisible Goods in Pseudomarkets with Constraints," Journal of Political Economy, University of Chicago Press, vol. 132(11), pages 3708-3736.
    5. Thành Nguyen & Rakesh Vohra, 2022. "(Near) Substitute Preferences and Equilibria with Indivisibilities," PIER Working Paper Archive 22-010, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Matching theory; Market design; Labor market;
    All these keywords.

    JEL classification:

    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games

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