Learning and Efficiency with Search Frictions

Xi Weng

Frontiers of Economics in China-Selected Publications from Chinese Universities, 2015, vol. 10, issue 3, 449-466

Abstract: This paper studies the allocative efficiency in a Moscarini (2005)-type equilibrium search environment with learning. It is shown that the stationary equilibrium is efficient if and only if the Hosios condition holds no matter whether learning is about firm-specific human capital or about general human capital. However, the stationary equilibrium can never be efficient if externalities exist from unemployment. In contrast, even with externalities, the stationary equilibrium can be efficient under some modified Hosios condition if there is no uncertainty (standard Mortensen and Pissarides (1994)-type equilibrium search environment). The key intuition is that the equilibrium can only be efficient if firm-worker matching is formed and terminated efficiently.

Keywords: learning; efficiency; search friction; Nash bargaining; firm specific human capital; general human capital (search for similar items in EconPapers)
JEL-codes: D83 E24 J63 J64 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:fec:journl:v:10:y:2015:i:3:p:449-466

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