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Is assortative matching efficient?

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  • Steven N. Durlauf
  • Ananth Seshadri

Abstract

This paper develops some general conditions under which complementarities between individual agents imply that assortative matching is efficient. Our analysis has four main findings. First, when agents are organized into equal-sized groups, just as in Becker (1973), the presence of within-group complementarities is sufficient for stratification to be efficient. Second, if group sizes vary, assortative matching may not be efficient even though complementarities are present, unless particular functional form assumptions are imposed. Third, the connection between assortative matching, complementarities and efficiency reemerges if one considers sequences of replications of the economy in which individual coalitions are uniformly bounded in size. Fourth, the presence of feedbacks from the composition of group memberships has important effects on efficient allocations and breaks any simple link between assortative matching and efficiency. Together, these results suggest that the characterization of the cross-section evolution of an efficiently sorted economy is likely to be highly complex. Copyright Springer-Verlag Berlin Heidelberg 2003

Suggested Citation

  • Steven N. Durlauf & Ananth Seshadri, 2003. "Is assortative matching efficient?," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 21(2), pages 475-493, March.
    • Handle: RePEc:spr:joecth:v:21:y:2003:i:2:p:475-493
    DOI: 10.1007/s00199-002-0269-8
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    Cited by:

    1. Anjos, Fernando & Drexler, Alejandro, 2015. "Inter-company matching and the supply of informed capital," Journal of Economic Behavior & Organization, Elsevier, vol. 111(C), pages 119-136.
    2. Steven N. Durlauf & Yannis M. Ioannides, 2010. "Social Interactions," Annual Review of Economics, Annual Reviews, vol. 2(1), pages 451-478, September.
    3. Andreas Bjerre-Nielsen, 2015. "Sorting in Networks: Adversity and Structure," Papers 1503.07389, arXiv.org, revised Aug 2017.
    4. Christian Ahlin, 2017. "Matching Patterns When Group Size Exceeds Two," American Economic Journal: Microeconomics, American Economic Association, vol. 9(1), pages 352-384, February.
    5. Rege, Mari, 2008. "Why do people care about social status?," Journal of Economic Behavior & Organization, Elsevier, vol. 66(2), pages 233-242, May.
    6. Bandyopadhyay, Siddhartha & Cabrales, Antonio, 2023. "Pricing group membership," Mathematical Social Sciences, Elsevier, vol. 123(C), pages 114-121.
    7. Néstor Gandelman, 2008. "Mobility Among Employers and Assortative Matching," Journal of Sports Economics, , vol. 9(4), pages 351-370, August.
    8. Bjerre-Nielsen, Andreas, 2020. "Assortative matching with network spillovers," Journal of Economic Theory, Elsevier, vol. 187(C).
    9. Tan, Chih Ming & Tan, Zhibo & Zhang, Xiaobo, 2023. "The intergenerational legacy of the 1959–1961 Great Chinese Famine on children’s cognitive development," Economics & Human Biology, Elsevier, vol. 51(C).
    10. Belhaj, Mohamed & Deroïan, Frédéric, 2021. "The value of network information: Assortative mixing makes the difference," Games and Economic Behavior, Elsevier, vol. 126(C), pages 428-442.
    11. repec:osf:socarx:jn4a6_v1 is not listed on IDEAS
    12. Chris Bidner, 2014. "A spillover-based theory of credentialism," Canadian Journal of Economics, Canadian Economics Association, vol. 47(4), pages 1387-1425, November.

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