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Mismatch, rematch, and investment

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  • Gall, Thomas
  • Legros, Patrick
  • Newman, Andrew

Abstract

This paper studies rigidities in sharing joint payoffs (non-transferability) as a source of excessive segregation in labor or education markets. The resulting distortions in ex-ante investments, such as education acquisition, link such mismatches to the possibility of simultaneous under-investment by the underprivileged and over-investment by the privileged. This creates an economic rationale for rematch policies like affirmative action, which have to be evaluated in terms of both incentives and the assignment quality. We compare a number of such policies that have empirical counterparts. Our results indicate that some of these policies can be beneficial on both equity and efficiency grounds.

Suggested Citation

  • Gall, Thomas & Legros, Patrick & Newman, Andrew, 2012. "Mismatch, rematch, and investment," Discussion Paper Series In Economics And Econometrics 189, Economics Division, School of Social Sciences, University of Southampton.
  • Handle: RePEc:stn:sotoec:189
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    6. Peter Arcidiacono & Esteban M. Aucejo & Hanming Fang & Kenneth I. Spenner, 2011. "Does affirmative action lead to mismatch? A new test and evidence," Quantitative Economics, Econometric Society, vol. 2(3), pages 303-333, November.
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    Citations

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    Cited by:

    1. repec:stn:sotoec:360186 is not listed on IDEAS
    2. V. Bhaskar & Ed Hopkins, 2016. "Marriage as a Rat Race: Noisy Premarital Investments with Assortative Matching," Journal of Political Economy, University of Chicago Press, vol. 124(4), pages 992-1045.
    3. Raquel Fernandez, 2010. "Women's Rights and Development," Working Papers 2011-029, Human Capital and Economic Opportunity Working Group.
    4. Fernández, Raquel, 2009. "Women's Rights and Development," CEPR Discussion Papers 7464, C.E.P.R. Discussion Papers.
    5. Andrea Canidio, 2012. "The Allocation of Scientific Talent," CEU Working Papers 2012_7, Department of Economics, Central European University, revised 15 May 2012.
    6. Andrea, Canidio, 2009. "The production of science," MPRA Paper 25218, University Library of Munich, Germany.
    7. repec:spr:jogath:v:46:y:2017:i:1:d:10.1007_s00182-015-0522-6 is not listed on IDEAS
    8. Andrea, Canidio, 2010. "Absorptive capacity, the allocation of scientists, and firms' research productivity," MPRA Paper 30257, University Library of Munich, Germany.
    9. Chris Bidner & Guillaume Roger & Jessica Moses, 2016. "Investing in Skill and Searching for Coworkers: Endogenous Participation in a Matching Market," American Economic Journal: Microeconomics, American Economic Association, vol. 8(1), pages 166-202, February.
    10. Gall, Thomas & Hu, Xiaocheng & Vlassopoulos, Michael, 2016. "Dynamic Incentive Effects of Team Formation: Experimental Evidence," IZA Discussion Papers 10393, Institute for the Study of Labor (IZA).
    11. Raquel Fernández, 2009. "Women's Rights and Development," NBER Working Papers 15355, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy
    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
    • J78 - Labor and Demographic Economics - - Labor Discrimination - - - Public Policy (including comparable worth)

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