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Heterogenous match efficiency

Ito Seiro

No 604, IDE Discussion Papers from Institute of Developing Economies, Japan External Trade Organization(JETRO)

Abstract: In this paper, we show a model with one-sided endogenous match efficiency. It is assumed that schooling can enhance match efficiency, and people will choose the schooling level optimally to balance its costs and benefits of enhanced match efficiency. Assuming a financial market imperfection which limits individuals to borrow, we showed that, in equilibrium, when educational achievements can be characterised by dicohotomy (secondary vs. tertiary), tertiary education gives higher wages even it only has pure match efficiency (signalling) value with no human capital value. We also showed that relative match efficiency vis-a-vis its mean matters in wage levels.

Keywords: Labor market; Employment; Education; Job search; Signaling; Match efficiency (search for similar items in EconPapers)
JEL-codes: J13 J64 (search for similar items in EconPapers)
Date: 2016-05-01
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Published in IDE Discussion Paper = IDE Discussion Paper, No. 604. 2016-05-01

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