Labor Market Search and Schooling Investment

Christopher Flinn

No 212, Carlo Alberto Notebooks from Collegio Carlo Alberto

Abstract: We generalize the standard search, matching, and bargaining framework to allow individuals to acquire productivity-enhancing schooling prior to labor market entry. As is well-known, search frictions and weakness in bargaining position contribute to under-investment from an efficiency perspective. In order to evaluate the sensitivity of schooling investments to "hold up," the model is estimated using Current Population Survey data. We focus on the impact of bargaining power on schooling investment, and find that the effects are large. A brief exploration of the two-sided investment model suggests that something akin to a "Hosios condition" result regarding the socially optimal surplus division rule may be attainable.

Keywords: Labor market search; schooling choice; hold-up; Nash bargaining (search for similar items in EconPapers)
JEL-codes: J24 J3 J64 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2011
New Economics Papers: this item is included in nep-dge and nep-lab
References: View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: LABOR MARKET SEARCH AND SCHOOLING INVESTMENT (2015)
Working Paper: Labor Market Search and Schooling Investment (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:cca:wpaper:212

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