On the efficiency properties of the Roy's model under asymmetric information

Concetta Mendolicchio and Tito Pietra

No 201408, IAB-Discussion Paper from Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]

Abstract: "We consider Roy's economies with perfectly competitive labor markets and asymmetric information. Firms choose their investments in physical capital before observing the characteristics of the labor markets they will face. We provide conditions under which equilibrium allocations are constrained Pareto efficient, i.e., such that it is impossible to improve upon the equilibrium allocation by changing agents' investments and letting the other endogenous variables adjust to restore market clearing. We also provide a robust example of a class of economies where these conditions fail and where equilibria are characterized by overinvestments in high skills. Finally, we discuss some implications of our main results for the optimal taxation literature." (Author's abstract, IAB-Doku) ((en))

Keywords: Besteuerung; Bildungsinvestitionen; Gleichgewichtstheorie; Humankapital; Informationsfluss; Investitionsverhalten; Marktgleichgewicht; Optimierung; Pareto, Vilfredo; Unternehmen; Arbeitsmarktgleichgewicht; Arbeitsmarktmodell; Arbeitsmarkttheorie; Volkswirtschaftstheorie (search for similar items in EconPapers)
JEL-codes: D60 D82 J24 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2014
New Economics Papers: this item is included in nep-cta
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https://doku.iab.de/discussionpapers/2014/dp0814.pdf

Related works:
Working Paper: On the efficiency properties of the Roy?s model under asymmetric information (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:iab:iabdpa:201408

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