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Efficiency of job creation in a search and matching model with labor force participation

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  • Julien, Benoît
  • Mangin, Sephorah

Abstract

In a search and matching model where workers are ex ante heterogeneous with respect to productivity and there is labor force participation, Albrecht et al. (2010) show that satisfying the Hosios rule leads to excessive vacancy creation. We show that efficient vacancy creation requires a modified version of the Hosios condition that captures not only the standard search externalities but also the output externality and the participation externality.

Suggested Citation

  • Julien, Benoît & Mangin, Sephorah, 2017. "Efficiency of job creation in a search and matching model with labor force participation," Economics Letters, Elsevier, vol. 150(C), pages 149-151.
    • Handle: RePEc:eee:ecolet:v:150:y:2017:i:c:p:149-151
    DOI: 10.1016/j.econlet.2016.10.042
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    References listed on IDEAS

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    1. Masters, Adrian, 2015. "Efficiency in a search and matching model with participation policy," Economics Letters, Elsevier, vol. 134(C), pages 111-113.
    2. Charlot, Olivier & Malherbet, Franck & Ulus, Mustafa, 2013. "Efficiency in a search and matching economy with a competitive informal sector," Economics Letters, Elsevier, vol. 118(1), pages 192-194.
    3. Gavrel, Frédéric, 2011. "On the efficiency of participation with vertically differentiated workers," Economics Letters, Elsevier, vol. 112(1), pages 100-102, July.
    4. Mangin, Sephorah & Julien, Benoît, 2021. "Efficiency in search and matching models: A generalized Hosios condition," Journal of Economic Theory, Elsevier, vol. 193(C).
    5. Albrecht, James & Navarro, Lucas & Vroman, Susan, 2010. "Efficiency in a search and matching model with endogenous participation," Economics Letters, Elsevier, vol. 106(1), pages 48-50, January.
    6. Arthur J. Hosios, 1990. "On The Efficiency of Matching and Related Models of Search and Unemployment," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 57(2), pages 279-298.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Krolikowski, Pawel M. & McCallum, Andrew H., 2021. "Goods-market frictions and international trade," Journal of International Economics, Elsevier, vol. 129(C).
    2. Stanislav Rabinovich & Ronald Wolthoff, 2020. "Misallocation Effects of Labor Market Frictions," Working Papers tecipa-662, University of Toronto, Department of Economics.
    3. Pau S. Pujolas & Zachary L. Mahone, 2017. "Optimal Design and Quantitative Evaluation of the Minimum Wage," Department of Economics Working Papers 2017-15, McMaster University.
    4. Lam, Wing Tung, 2020. "Inefficient sorting under output sharing," Journal of Economic Theory, Elsevier, vol. 187(C).
    5. Miroslav Gabrovski & Victor Ortego-Marti, 2025. "Home Construction Financing and Search Frictions in the Housing Market," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 55, January.
    6. Griffy, Benjamin & Masters, Adrian, 2022. "Labor market policy in the presence of a participation externality," European Economic Review, Elsevier, vol. 144(C).
    7. Miroslav Gabrovski & Victor Ortego-Marti, 2021. "Efficiency in the Housing Market with Search Frictions," Working Papers 202108, University of California at Riverside, Department of Economics.
    8. Rabinovich, Stanislav & Wolthoff, Ronald, 2022. "Misallocation inefficiency in partially directed search," Journal of Economic Theory, Elsevier, vol. 206(C).
    9. Makoto Masui, 2020. "Efficiency in a search and matching model with endogenous labor participation and different skill groups," Economics Bulletin, AccessEcon, vol. 40(4), pages 2648-2653.

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    More about this item

    Keywords

    Search; Matching; Efficiency; Participation; Hosios rule;
    All these keywords.

    JEL classification:

    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers

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