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Title:Efficiency in a matching model with heterogeneous agents : too many good or bad jobs? PDF Logo
Authors:Blázquez, Maite
Jansen, Marcel
Issue Date:2003
Series/Report no.:IZA Discussion paper series 968
Abstract:This paper analyses the efficiency of the equilibrium allocation in a matching model with two types of workers and jobs. The basic assumption is that high-skill workers can perform both skilled and unskilled jobs, while low-skill workers can only perform unskilled jobs. Our first result shows that the equilibrium with ex-post bargaining is never efficient. Second, under Hosios? (1990) condition we show that high-skill workers are under-valued in equilibrium, while the opposite holds for low-skill workers. Firms therefore tend to create too few unskilled jobs, resulting in a suboptimally high unemployment rate for low-skill workers. We show that these results generalize to environments with more types of agents and different production technologies. Finally, in an extension we derive a tax scheme that restores efficiency and we show how workers? bargaining strength affects unemployment and skill-mismatch.
Subjects:matching
ex post bargaining
heterogeneity
efficiency
JEL:D61
C78
J64
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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