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Competitive Wages in a Match with Ordered Contracts

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Author Info
Muriel Niederle

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Abstract

Following the recently dismissed antitrust lawsuit against the National Residency Matching Program (NRMP), Jeremy Bulow and Jonathan Levin (2006) propose a simple matching model in which firms set impersonal salaries simultaneously before matching with workers, which leads to lower aggregate wages than any competitive outcome. I model a feature of the NRMP, ordered contracts, that allows firms to set several contracts while determining the order in which they try to fill them, which has different properties than standard models with multiple contracts. Furthermore, the low wages of Bulow and Levin are no longer an equilibrium, but competitive wages are. (JEL D86, J31, J41)

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File URL: http://hdl.handle.net/10.1257/aer.97.5.1957
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Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 97 (2007)
Issue (Month): 5 (December)
Pages: 1957-1969
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Handle: RePEc:aea:aecrev:v:97:y:2007:i:5:p:1957-1969

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Muriel Niederle & Alvin E. Roth, 2004. "Market Culture: How Norms Governing Exploding Offers Affect Market Performance," Levine's Bibliography 122247000000000207, UCLA Department of Economics. [Downloadable!]
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  2. Muriel Niederle & Alvin E. Roth, 2005. "The Gastroenterology Fellowship Market: Should There Be a Match?," American Economic Review, American Economic Association, vol. 95(2), pages 372-375, May. [Downloadable!]
  3. Muriel Niederle & Alvin E. Roth, 2003. "Unraveling Reduces Mobility in a Labor Market: Gastroenterology with and without a Centralized Match," Journal of Political Economy, University of Chicago Press, vol. 111(6), pages 1342-1352, December. [Downloadable!] (restricted)
  4. C. Nicholas McKinney & Muriel Niederle & Alvin E. Roth, 2005. "The Collapse of a Medical Labor Clearinghouse (and Why Such Failures Are Rare)," American Economic Review, American Economic Association, vol. 95(3), pages 878-889, June. [Downloadable!]
  5. John William Hatfield & Paul R. Milgrom, 2005. "Matching with Contracts," American Economic Review, American Economic Association, vol. 95(4), pages 913-935, September. [Downloadable!]
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  6. Roth, Alvin E, 1984. "Stability and Polarization of Interests in Job Matching," Econometrica, Econometric Society, vol. 52(1), pages 47-57, January. [Downloadable!] (restricted)
  7. Alvin E. Roth & Elliott Peranson, 1999. "The Redesign of the Matching Market for American Physicians: Some Engineering Aspects of Economic Design," NBER Working Papers 6963, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  8. Jonathan Levin & Jeremy Bulow, 2004. "Matching and Price Competition," Econometric Society 2004 North American Winter Meetings 350, Econometric Society. [Downloadable!]
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  9. Roth, Alvin E, 1984. "The Evolution of the Labor Market for Medical Interns and Residents: A Case Study in Game Theory," Journal of Political Economy, University of Chicago Press, vol. 92(6), pages 991-1016, December. [Downloadable!] (restricted)
  10. Kelso, Alexander S, Jr & Crawford, Vincent P, 1982. "Job Matching, Coalition Formation, and Gross Substitutes," Econometrica, Econometric Society, vol. 50(6), pages 1483-1504, November. [Downloadable!] (restricted)
  11. Vincent Crawford, 2005. "The Flexible-Salary Match: A Proposal to Increase the Salary Flexibility of the National Resident Matching Program," University of California at San Diego, Economics Working Paper Series 2005-02, Department of Economics, UC San Diego. [Downloadable!]
  12. Crawford, Vincent P & Knoer, Elsie Marie, 1981. "Job Matching with Heterogeneous Firms and Workers," Econometrica, Econometric Society, vol. 49(2), pages 437-50, March. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Alvin Roth, 2008. "Deferred acceptance algorithms: history, theory, practice, and open questions," International Journal of Game Theory, Springer, vol. 36(3), pages 537-569, March. [Downloadable!] (restricted)
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  2. Muriel Niederle & Alvin E. Roth, 2007. "The Effects of a Centralized Clearinghouse on Job Placement, Wages, and Hiring Practices," NBER Working Papers 13529, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  3. Hideo Konishi & Margarita Sapozhnikov, 2006. "Decentralized Matching Markets with Endogenous Salaries," Boston College Working Papers in Economics 654, Boston College Department of Economics, revised 03 Jan 2008. [Downloadable!]
  4. Christopher Avery & Christine Jolls & Richard Posner & Alvin E. Roth, 2007. "The New Market for Federal Judicial Law Clerks," NBER Working Papers 13213, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
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