Efficiency in a Search and Matching Model with Endogenous Participation

James Albrecht (), Lucas Navarro () and Susan Vroman ()
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Lucas Navarro: Universidad Alberto Hurtado

No 4097, IZA Discussion Papers from Institute for the Study of Labor (IZA)

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 (search for similar items in EconPapers)
JEL-codes: D8 J6 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge and nep-lab
Date: 2009-03
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Working Paper: Efficiency in a Search and Matching Model with Endogenous Participation (2009)
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