Efficiency in a search and matching model with endogenous participation

James Albrecht; Lucas Navarro; Susan Vroman

We show that in a search/matching model with endogenous participation in which workers are heterogeneous with respect to market productivity, satisfying the Hosios rule leads to excessive vacancy creation. The reason is that the marginal worker does not internalize the effect of his or her participation on average productivity. -- Search ; matching ; efficiency ; participation ; Hosios rule

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Year of publication:	2009
Authors:	Albrecht, James W. ; Navarro, Lucas ; Vroman, Susan B.
Publisher:	Bonn : IZA
Subject:	Arbeitsuche \| Job search \| Suchtheorie \| Search theory \| Arbeitsangebot \| Labour supply \| Arbeitsproduktivität \| Labour productivity \| Offene Stellen \| Job vacancies \| Theorie \| Theory