Assortative matching through signals

Friedrich Poeschel

No 201215, IAB-Discussion Paper from Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]

Abstract: "The matching of likes is a frequently observed phenomenon. However, for such assortative matching to arise in a search model, often implausibly strong conditions are required. This paper shows that, once signals are introduced, a search model can generate even perfect assortative matching under weak conditions: supermodularity of the match production function is a necessary and sufficient condition. It simultaneously drives sorting and functions as a single-crossing property ensuring that agents choose truthful signals. The information thereby transmitted allows agents to avoid all unnecessary costs of random search, which creates in effect an almost frictionless environment. Hence the unique separating equilibrium in the model achieves nearly unconstrained efficiency despite frictions." (Author's abstract, IAB-Doku) ((en))

Keywords: ökonomische Theorie; Produktionsfunktion; Strukturierung; Suchverfahren; Arbeitsuche (search for similar items in EconPapers)
JEL-codes: C78 D83 J64 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2012
New Economics Papers: this item is included in nep-dge
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Working Paper: Assortative matching through signals (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:iab:iabdpa:201215

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