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Learning and Efficiency with Search Frictions

Author

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  • Xi Weng

    (Department of Applied Economics, Guanghua School of Management, Peking University, Beijing 100871, China)

Abstract

This paper studies the allocative efficiency in a Moscarini (2005)-type equilibrium search environment with learning. It is shown that the stationary equilibrium is efficient if and only if the Hosios condition holds no matter whether learning is about firm-specific human capital or about general human capital. However, the stationary equilibrium can never be efficient if externalities exist from unemployment. In contrast, even with externalities, the stationary equilibrium can be efficient under some modified Hosios condition if there is no uncertainty (standard Mortensen and Pissarides (1994)-type equilibrium search environment). The key intuition is that the equilibrium can only be efficient if firm-worker matching is formed and terminated efficiently.

Suggested Citation

  • Xi Weng, 2015. "Learning and Efficiency with Search Frictions," Frontiers of Economics in China-Selected Publications from Chinese Universities, Higher Education Press, vol. 10(3), pages 449-466, September.
    • Handle: RePEc:fec:journl:v:10:y:2015:i:3:p:449-466
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    File URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-004-015-0019-4
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    Citations

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    Cited by:

    1. Fei Li & Xi Weng, 2017. "Efficient Learning And Job Turnover In The Labor Market," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 58(3), pages 727-750, August.

    More about this item

    Keywords

    learning; efficiency; search friction; Nash bargaining; firm specific human capital; general human capital;
    All these keywords.

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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