Efficiency and specialization: A search theoretic approach

Konstantinos Eleftheriou

Economic Modelling, 2011, vol. 28, issue 1, 229-238

Abstract: An extension of the traditional Roy model to incorporate the existence of search frictions is proposed. The efficiency of model is then tested under the existence of the standard Hosios condition. The results show that a new kind of externality which is related to the degree of job specialization arises and therefore Hosios condition fails to guarantee efficiency. Policies which subsidize employment and aim at job specialization of individuals, will equate the social with the private market outcome.

Keywords: Efficiency; Search; Skills (search for similar items in EconPapers)
JEL-codes: J24 J62 J64 (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:28:y:2011:i:1:p:229-238

DOI: 10.1016/j.econmod.2010.09.007

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