Efficiency in a Search and Matching Model with Endogenous Participation

8 Pages Posted: 7 Apr 2009

See all articles by James Albrecht

James Albrecht

Georgetown University - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute); IZA Institute of Labor Economics

Lucas Navarro

Universidad Alberto Hurtado

Susan Vroman

Georgetown University; IZA Institute of Labor Economics

Abstract

We show that in a search/matching model with endogenous participation in which workers are heterogeneous with respect to market productivity, satisfying the Hosios rule leads to excessive vacancy creation. The reason is that the marginal worker does not internalize the effect of his or her participation on average productivity.

Keywords: search, matching, efficiency, participation, Hosios rule

JEL Classification: D8, J6

Suggested Citation

Albrecht, James W. and Navarro, Lucas and Vroman, Susan B., Efficiency in a Search and Matching Model with Endogenous Participation. IZA Discussion Paper No. 4097. Available at SSRN: https://ssrn.com/abstract=1373331

James W. Albrecht (Contact Author)

Georgetown University - Department of Economics ( email )

Washington, DC 20057
United States
202-687-6105 (Phone)
202-687-6102 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Lucas Navarro

Universidad Alberto Hurtado ( email )

Casilla 14446
Correo 21
Chile

Susan B. Vroman

Georgetown University ( email )

Washington, DC 20057
United States
202-687-6024 (Phone)
202-687-6102 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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