Efficient Mismatch

David Arseneau and Brendan Epstein

No 2018-037, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: This paper presents a model in which mismatch employment arises in a constrained efficient equilibrium. In the decentralized economy, however, mismatch gives rise to a congestion externality whereby heterogeneous job seekers fail to internalize how their individual actions affect the labor market outcomes of competitors in a common unemployment pool. We provide an analytic characterization of this distortion, assess the distributional nature of the associated welfare effects, and relate it to the relative productivity of low- and high-skilled workers competing for similar jobs.

Keywords: Competitive search equilibrium; Crowding in/out; Labor market frictions; skills mismatch (search for similar items in EconPapers)
JEL-codes: E24 J31 J64 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2018-06-01
New Economics Papers: this item is included in nep-dge, nep-lab and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgfe:2018-37

DOI: 10.17016/FEDS.2018.037

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