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Job security, stability and production efficiency

Hu Fu (), Robert Kleinberg (), Ron Lavi () and Rann Smorodinsky ()
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Hu Fu: Department of Computing and Mathematical Sciences, California Institute of Technology
Robert Kleinberg: Department of Computer Science, Cornell University
Ron Lavi: Faculty of Industrial Engineering and Management, Technion -- Israel Institute of Technology
Rann Smorodinsky: Faculty of Industrial Engineering and Management, Technion-- Israel Institute of Technology

Theoretical Economics, 2017, vol. 12, issue 1

Abstract: We study a 2-sided matching market with a set of heterogeneous firms and workers in an environment where jobs are secured by regulation. Without job security Kelso and Crawford have shown that stable outcomes and efficiency prevail when all workers are (weak) gross substitutes to each firm, in the sense that increases in other workers' salaries can never cause a firm to withdraw an offer from a worker whose salary has not risen. It turns out that by introducing job security, stability and efficiency may still prevail, and even for a significantly broader class of production functions.

Keywords: Matching; stability; labor market; job security; efficiency (search for similar items in EconPapers)
JEL-codes: C78 D44 D82 (search for similar items in EconPapers)
Date: 2017-02-01
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