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On the Inefficiency of Matching Models of Unemployment with Heterogeneous Workers and Jobs when Firms Rank their Applicants

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  • Frédéric Gavrel

    (University of Caen Basse-Normandie, France - CREM-CNRS)

Abstract

In a circular matching model, firms rank their applicants and pick the best suited one. Job creation appears to lower the average output. As firms do not internalize this effect, jobs are too many in the laissez-faire equilibrium under the Hosios condition. Due to similar externalities firms' search intensities are too strong whereas workers' search intensities are too weak.

Suggested Citation

  • Frédéric Gavrel, 2011. "On the Inefficiency of Matching Models of Unemployment with Heterogeneous Workers and Jobs when Firms Rank their Applicants," Economics Working Paper Archive (University of Rennes 1 & University of Caen) 201107, Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS.
    • Handle: RePEc:tut:cremwp:201107
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    References listed on IDEAS

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    1. Pieter A. Gautier & Coen N. Teulings, 2006. "How Large are Search Frictions?," Journal of the European Economic Association, MIT Press, vol. 4(6), pages 1193-1225, December.
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    3. Gavrel, Frédéric, 2012. "On the inefficiency of matching models of unemployment with heterogeneous workers and jobs when firms rank their applicants," European Economic Review, Elsevier, vol. 56(8), pages 1746-1758.
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    Citations

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    Cited by:

    1. Frédéric Gavrel, 2015. "Participation, Recruitment Selection, and the Minimum Wage," Scandinavian Journal of Economics, Wiley Blackwell, vol. 117(4), pages 1281-1305, October.
    2. Frédéric Gavrel, 2015. "Participation, Recruitment Selection, and the Minimum Wage: Online Appendix Dynamics and directed search," Post-Print halshs-01242506, HAL.
    3. Frédéric Gavrel, 2011. "Is the Formal Sector too Large or too Small? A Reexamination of Minimum Wages in Developing Countries," Economics Working Paper Archive (University of Rennes 1 & University of Caen) 201108, Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS.
    4. Frédéric Gavrel & Thérèse Rebière, 2017. "On the Equilibrium and Welfare Consequences of Getting Ahead of the Smiths," Post-Print halshs-01242504, HAL.
    5. Gavrel, Frédéric, 2012. "On the inefficiency of matching models of unemployment with heterogeneous workers and jobs when firms rank their applicants," European Economic Review, Elsevier, vol. 56(8), pages 1746-1758.
    6. Sengul, Gonul, 2017. "Effect of labor market policies on unemployment when firms adapt their recruitment strategy," Economic Modelling, Elsevier, vol. 60(C), pages 169-179.
    7. Benoît Julien & Sephorah Mangin, 2016. "Efficiency in Search and Matching Models: A Generalized Hosios Condition," Monash Economics Working Papers 28-16, Monash University, Department of Economics.
    8. Frédéric Gavrel & Thérèse Rebière, 2015. "On the Equilibrium and Welfare Consequences of Going Ahead of the Smiths," Working Papers halshs-01242504, HAL.

    More about this item

    Keywords

    Matching; Differentiation of skills; Applicant ranking; Labor market; efficiency;

    JEL classification:

    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers

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