Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/80334 
Authors: 
Year of Publication: 
2013
Series/Report no.: 
Economics Discussion Papers No. 2013-40
Publisher: 
Kiel Institute for the World Economy (IfW), Kiel
Abstract: 
This paper contributes to the debate concerning the micro-foundation of matching functions in frictional labor markets. The focus is on a particular matching regime, i.e., the so-called urn-ball process. It is shown that in a two-sector economy, even in the presence of heterogeneous workers, the assumption of applicants-ranking may be misleading. Instead, the choice concerning the adoption of either ranking or no-ranking behavior is endogenous and it is affected by both the tightness of the two sectors and the composition of the labor force in terms of skills. Moreover it is proved that exogenous shocks may change the form of the matching function. This result casts additional doubts on the assumption of exogenous matching functions often made in empirical works aimed at assessing the effectiveness of policy measures.
Subjects: 
matching function
urn-ball model
Bayesian Nash equilibrium
JEL: 
J63
J64
Creative Commons License: 
cc-by Logo
Document Type: 
Working Paper

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