 Efficiency of Investment in Human and Physical Capital in a Model of Bilateral Search and BargainingInternational Economic Review, 1998, vol. 39, issue 2, 477-94 Abstract: A matching model is used to analyze the effect of search frictions on incentives to invest in human and physical capital. Equilibrium involves inefficient (low) levels of investment. The source of the inefficiency cannot be attributed solely to either search or bargaining. Schemes that assist matching are Pareto-improving. While the ratio of workers to firms remains fixed, intermediaries that pay owners according to the amount of capital carried into the market are able to generate efficient outcomes. Such intervention may not eliminate inefficiencies when the ratio is endogenized. Policy implications include encouragement of investment (even while abstracting from growth). Copyright 1998 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association. Date: 1998 There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:ier:iecrev:v:39:y:1998:i:2:p:477-94 Ordering information: This journal article can be ordered from Access Statistics for this article International Economic Review is currently edited by Harold L. Cole More articles in International Economic Review from Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association 160 McNeil Building, 3718 Locust Walk, Philadelphia, PA 19104-6297. Contact information at EDIRC. |
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