Job Matching with Subsidy and Taxation

44 Pages Posted: 16 Aug 2020

See all articles by Fuhito Kojima

Fuhito Kojima

Stanford University

Ning Sun

Nanjing Audit University

Ning Neil Yu

Nanjing Audit University - Institute for Social and Economic Research

Date Written: July 14, 2020

Abstract

Governments often provide employers with financial incentives which depend on the sets of people they hire. Studying such fiscal policies in a classical job matching framework, we provide a necessary and sufficient condition for a policy to preserve the substitute condition (for all revenue functions satisfying it); this is crucial for equilibrium existence and stability. These policies are characterized by sums of additively separable and "cardinally concave" transfer functions. Then we characterize transfer functions that preserve the substitute condition for several important sub-classes of revenue functions: e.g., when doctors are homogeneous within groups. Implications for auction design are also discussed.

Keywords: job matching; gross substitutes condition; subsidy and taxation; transfer function; policy intervention; rural hospital

JEL Classification: C78; D47; D50; J20

Suggested Citation

Kojima, Fuhito and Sun, Ning and Yu, Ning Neil, Job Matching with Subsidy and Taxation (July 14, 2020). Available at SSRN: https://ssrn.com/abstract=3624343 or http://dx.doi.org/10.2139/ssrn.3624343

Fuhito Kojima (Contact Author)

Stanford University ( email )

Stanford, CA 94305
United States

Ning Sun

Nanjing Audit University ( email )

86 Yushan W Rd
Pukou, Jiangsu 210017
China

Ning Neil Yu

Nanjing Audit University - Institute for Social and Economic Research ( email )

Stanford, CA 94305
United States

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