Two-sided heterogeneity, endogenous sharing, and international matching markets

Jaerim Choi ()

Economic Theory, 2021, vol. 72, issue 2, No 4, 473-509

Abstract: Abstract This paper develops a multi-country, multi-sector, and multi-factor model of two-sided matching between heterogeneous workers and entrepreneurs in which agents in different countries can form cross-country teams. Sorting, matching, and sharing problems are all considered in a unified framework. Equilibrium is characterized by endogenous sharing rules, which break away from competitive marginal productivity theories of factor returns. I illustrate that a bilateral economic integration agreement can affect the welfare of agents in an unrelated third country, and that a reduction in the cost of sector-specific matching can increase welfare for all agents without conflicts of interest.

Keywords: Two-Sided matching; Sorting; Matching; Offshoring; Economic integration agreement (search for similar items in EconPapers)
JEL-codes: C78 D33 D50 F23 F66 J20 J31 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (2)

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Working Paper: Two-Sided Heterogeneity, Endogenous Sharing, and International Matching Markets (2020)
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DOI: 10.1007/s00199-020-01297-7

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