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Policy Analysis in Matching Markets

Nikhil Agarwal

American Economic Review, 2017, vol. 107, issue 5, 246-50

Abstract: Price and quantity interventions intended to affect assignments are common in many labor and education markets (e.g., financial aid, quotas). This article discusses an empirical framework, based on the theory of stable matching, that is suitable for policy analysis while accounting for the presence of equilibrium sorting. It then compares financial incentives and supply interventions for encouraging the training of family medicine residents in rural America. Due to equilibrium effects, the primary effect of financial incentives is to increase the quality, not numbers, of residents in rural programs, while quantity regulations directly affect numbers without adversely affecting quality.

JEL-codes: C78 I11 I18 J24 J44 (search for similar items in EconPapers)
Date: 2017
Note: DOI: 10.1257/aer.p20171112
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Handle: RePEc:aea:aecrev:v:107:y:2017:i:5:p:246-50