An Incentive Theory of Matching

Dennis Snower, Christian Merkl and Alessio Brown

No 7283, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper presents a theory explaining the labor market matching process through microeconomic incentives. There are heterogeneous variations in the characteristics of workers and jobs, and firms face adjustment costs in responding to these variations. Matches and separations are described through firms' job offer and firing decisions and workers' job acceptance and quit decisions. This approach obviates the need for a matching function. On this theoretical basis, we argue that the matching function is vulnerable to the Lucas critique. Our calibrated model for the U.S. economy can account for important empirical regularities that the conventional matching model cannot.

Keywords: Adjustment costs; Employment; Firing; Incentives; Job acceptance; Job offers; Matching; Quits; Unemployment (search for similar items in EconPapers)
JEL-codes: E24 E32 J63 J64 (search for similar items in EconPapers)
Date: 2009-04
New Economics Papers: this item is included in nep-dge, nep-lab, nep-ltv and nep-mac
References: Add references at CitEc
Citations: View citations in EconPapers (24)

Downloads: (external link)
https://cepr.org/publications/DP7283 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Journal Article: AN INCENTIVE THEORY OF MATCHING (2015)
Working Paper: An Incentive Theory of Matching (2010)
Working Paper: An Incentive Theory of Matching (2010)
Working Paper: An Incentive Theory of Matching (2009)
Working Paper: An incentive theory of matching (2009)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:7283

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP7283

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().