Rematching with Contracts under Labor Mobility Restrictions: Theory and Application

62 Pages Posted: 15 Apr 2024

See all articles by Umut Dur

Umut Dur

North Carolina State University

Robert G. Hammond

North Carolina State University

M. Utku Ünver

Boston College - Department of Economics

Date Written: April 2, 2024

Abstract

Labor contracts typically do not limit worker mobility. Interesting exceptions exist in foreign worker reemployment and sports transfers. We develop a model to address contractual designs for such markets. Although legally, a firm can contest its worker’s recruitment by a competitor, it may be more lenient if he can be replaced immediately. We develop a theory of stability suitable for such markets and propose stable-uncontested mechanisms. As our application, we consider transfers in collegiate sports governed by the NCAA, where before 2021, a student-athlete had to sit out a year after a transfer. Beginning in 2021, free mobility was allowed. Anecdotal evidence suggests while pre-2021 regulations were detrimental to student and college welfare, post-2020 regulations led to colleges struggling to keep rosters and withholding new scholarship slots to use in transfers. Our model also captures the NCAA’s pre-2021 and post-2020 regulations as well as our new proposed efficiency-enhancing criterion. Then, using data from men’s collegiate basketball, we estimate college and student-athlete preferences. Using data from transfers, we run counterfactual analyses of pre-2021 and post-2020 environments and our proposed regulations. Our proposal achieves closer student-athlete welfare to post-2020 than pre-2021 and increases college welfare with respect to post-2020 and pre-2021.

Keywords: Matching Theory, Market Design, Matching with Contract, Labor Mobility, NCAA Transfers Market

JEL Classification: C78, D61, D67, D82, Z20

Suggested Citation

Dur, Umut and Hammond, Robert G. and Ünver, M. Utku, Rematching with Contracts under Labor Mobility Restrictions: Theory and Application (April 2, 2024). Available at SSRN: https://ssrn.com/abstract=4781912 or http://dx.doi.org/10.2139/ssrn.4781912

Umut Dur

North Carolina State University ( email )

Hillsborough Street
Raleigh, NC 27695
United States

Robert G. Hammond

North Carolina State University ( email )

Raleigh, NC 27695-8110
United States

HOME PAGE: http://www4.ncsu.edu/~rghammon/

M. Utku Ünver (Contact Author)

Boston College - Department of Economics ( email )

140 Commonwealth Avenue
Chestnut Hill, MA 02467
United States

HOME PAGE: http://sites.bc.edu/utku-unver

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