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An Incentive Theory of Matching

Alessio Brown, Christian Merkl () and Dennis J. Snower

Open Access Publications from Kiel Institute for the World Economy from Kiel Institute for the World Economy (IfW)

Abstract: This paper examines the labour market matching process by distinguishing its two component stages: the contact stage, in which job searchers make contact with employers and the selection stage, in which they decide whether to match. We construct a theoretical model explaining two-sided selection through microeconomic incentives. Firms face adjustment costs in responding to heterogeneous variations in the characteristics of workers and jobs. Matches and separations are described through firms' job offer and firing decisions and workers' job acceptance and quit decisions. Our calibrated model for the U.S. can account for important empirical regularities that the conventional matching model cannot.

Keywords: Matching; incentives; adjustment costs; unemployment; employment; quits; firing; job offers; job acceptance (search for similar items in EconPapers)
JEL-codes: E24 E32 J64 (search for similar items in EconPapers)
Date: 2010
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https://www.econstor.eu/bitstream/10419/37391/3/VfS_2010_pid_331.pdf (application/pdf)

Related works:
Journal Article: AN INCENTIVE THEORY OF MATCHING (2015) Downloads
Working Paper: An Incentive Theory of Matching (2010) Downloads
Working Paper: An Incentive Theory of Matching (2009) Downloads
Working Paper: An Incentive Theory of Matching (2009) Downloads
Working Paper: An incentive theory of matching (2009) Downloads
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