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Efficiency of job creation in a search and matching model with labor force participation

Benoit Julien () and Sephorah Mangin ()

Economics Letters, 2017, vol. 150, issue C, 149-151

Abstract: In a search and matching model where workers are ex ante heterogeneous with respect to productivity and there is labor force participation, Albrecht et al. (2010) show that satisfying the Hosios rule leads to excessive vacancy creation. We show that efficient vacancy creation requires a modified version of the Hosios condition that captures not only the standard search externalities but also the output externality and the participation externality.

Keywords: Search; Matching; Efficiency; Participation; Hosios rule (search for similar items in EconPapers)
JEL-codes: J6 (search for similar items in EconPapers)
Date: 2017
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Handle: RePEc:eee:ecolet:v:150:y:2017:i:c:p:149-151