Self-Enforced Job Matching

Ce Liu, Ziwei Wang and Hanzhe Zhang ()

American Economic Journal: Microeconomics, 2026, vol. 18, issue 2, 110-45

Abstract: Complementarities and peer effects are common in matching markets, yet incorporating them often leads to nonexistence of stable matchings. We observe that matching is often an ongoing process rather than a static allocation, where long-lived firms interact over time with short-lived workers. We show that when wages are flexible and firms are sufficiently patient, a dynamically stable solution always exists in many-to-one matching markets—even with complementarities and peer effects. Flexible wages are crucial to our result, as they not only facilitate surplus extraction when firms cooperate in no-poaching agreements but also enhance the threat of punishment through bidding wars.

JEL-codes: C72 C73 C78 D21 D62 J31 J41 (search for similar items in EconPapers)
Date: 2026
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Working Paper: Self-Enforced Job Matching (2023)
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DOI: 10.1257/mic.20240280

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