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Title:An incentive theory of matching PDF Logo
Authors:Brown, Alessio J. G.
Merkl, Christian
Snower, Dennis J.
Issue Date:2009
Series/Report no.:CEPR Discussion Paper Series, Centre for Economic Policy Research (CEPR), London 7283
Abstract:This paper presents a theory explaining the labor market matching process through microeconomic incentives. There are heterogeneous variations in the characteristics of workers and jobs, and firms face adjustment costs in responding to these variations. Matches and separations are described through firms' job offer and firing decisions and workers' job acceptance and quit decisions. This approach obviates the need for a matching function. On this theoretical basis, we argue that the matching function is vulnerable to the Lucas critique. Our calibrated model for the U.S. economy can account for important empirical regularities that the conventional matching model cannot.
JEL:E24
E32
J63
J64
Document Type:Working Paper
Appears in Collections:Publikationen von Forscherinnen und Forschern des IfW

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