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Complementarities and substitutabilities in matching models

  • Gabriele, CARDULLO

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))

This paper describes an equilibrium matching model with two types of workers producing two different intermediate goods. Labour markets are perfectly segmented, but productive complementarities between sectors and productive substitutability within sectors arise. This deeply changes the effects of labour market policies. A welfare analysis is also conducted. Under constant returns to scale in the matcing technology, the so-called Hosios condition is sufficient to guarantee the efficiency of the decentralized equilibrium.

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File URL: http://sites.uclouvain.be/econ/DP/IRES/2006-1.pdf
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Paper provided by Université catholique de Louvain, Département des Sciences Economiques in its series Discussion Papers (ECON - Département des Sciences Economiques) with number 2006001.

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Length: 19
Date of creation: 01 Jan 2006
Date of revision:
Handle: RePEc:ctl:louvec:2006001
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  1. Diamond, Peter A, 1982. "Wage Determination and Efficiency in Search Equilibrium," Review of Economic Studies, Wiley Blackwell, vol. 49(2), pages 217-27, April.
  2. Mortensen, Dale T & Pissarides, Christopher, 1999. "New Developments in Models of Search in the Labour Market," CEPR Discussion Papers 2053, C.E.P.R. Discussion Papers.
  3. Pierre Cahuc & André Zylberberg, 2004. "Labor Economics," MIT Press Books, The MIT Press, edition 1, volume 1, number 026203316x, June.
  4. Acemoglu, Daron, 2001. "Good Jobs versus Bad Jobs," Journal of Labor Economics, University of Chicago Press, vol. 19(1), pages 1-21, January.
  5. Hosios, Arthur J, 1990. "On the Efficiency of Matching and Related Models of Search and Unemployment," Review of Economic Studies, Wiley Blackwell, vol. 57(2), pages 279-98, April.
  6. Andolfatto, David, 1996. "Business Cycles and Labor-Market Search," American Economic Review, American Economic Association, vol. 86(1), pages 112-32, March.
  7. Merz, Monika, 1995. "Search in the labor market and the real business cycle," Journal of Monetary Economics, Elsevier, vol. 36(2), pages 269-300, November.
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