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An Incentive Theory of Matching

  • Dennis Snower

    (Kiel Institute for the World Economy)

  • Christian Merkl

    (Kiel Institute for the World Economy)

  • Alessio J. G. Brown

    (Kiel Institute for the World Economy)

We construct a theoretical model explaining two-sided selection through microeconomic incentives. Firms face adjustment costs in responding to heterogeneous variations in the characteristics of workers and jobs. Matches and separations are described through firms' job offer and firing decisions and workers' job acceptance and quit decisions. Our calibrated model for the U.S. can account for important empirical regularities that the conventional matching model cannot.

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Paper provided by Society for Economic Dynamics in its series 2010 Meeting Papers with number 439.

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Date of creation: 2010
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Handle: RePEc:red:sed010:439
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  12. Fahr, René & Sunde, Uwe, 2001. "Disaggregate Matching Functions," IZA Discussion Papers 335, Institute for the Study of Labor (IZA).
  13. Diaz-Vazquez, Pilar & Snower, Dennis J., 2002. "Can Insider Power Affect Employment?," IZA Discussion Papers 506, Institute for the Study of Labor (IZA).
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  24. Ramey, Garey & Fujita, Shigeru, 2006. "Job Matching and Propagation," University of California at San Diego, Economics Working Paper Series qt53s671h7, Department of Economics, UC San Diego.
  25. Assar Lindbeck & Dennis J. Snower, 2001. "Insiders versus Outsiders," Journal of Economic Perspectives, American Economic Association, vol. 15(1), pages 165-188, Winter.
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  28. Díaz-Vázquez, Pilar & Snower, Dennis J., 2003. "Can insider power affect employment?," Open Access Publications from Kiel Institute for the World Economy 2992, Kiel Institute for the World Economy (IfW).
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