The Comparative Statics of Sorting

Axel Anderson and Lones Smith

American Economic Review, 2024, vol. 114, issue 3, 709-51

Abstract: We create a general and tractable theory of increasing sorting in pairwise matching models with monetary transfers. The positive quadrant dependence partial order subsumes Becker (1973) as the extreme cases with most and least sorting and implies increasing regression coefficients. Our theory turns on synergy—the cross-partial difference or derivative of match production. This reflects basic economic forces: diminishing returns, technological convexity, insurance, and learning dynamics. We prove sorting increases if match synergy globally increases, and is cross-sectionally monotone or single crossing. We use our results to derive sorting predictions in major economics sorting papers and in new applications.

JEL-codes: C78 D21 D82 D86 J12 (search for similar items in EconPapers)
Date: 2024
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Working Paper: The Comparative Statics of Sorting (2021)
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DOI: 10.1257/aer.20210890

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