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Matching workers to firms facing budget constraints

Author

Listed:
  • Ahmadzadeh, Amirreza
  • Shahdadi, Behrang Kamali

Abstract

We study a many-to-one matching model with salaries in which firms face budget constraints. Mongell and Roth (1986) show that when firms face a budget constraint, a stable matching may not exist. We introduce an algorithm to find a strong stable matching by changing the budget of firms such that the total budget remains the same and each firm’s budget change is bounded by the value of at most one worker for that firm.

Suggested Citation

  • Ahmadzadeh, Amirreza & Shahdadi, Behrang Kamali, 2024. "Matching workers to firms facing budget constraints," Economics Letters, Elsevier, vol. 245(C).
    • Handle: RePEc:eee:ecolet:v:245:y:2024:i:c:s0165176524005329
    DOI: 10.1016/j.econlet.2024.112048
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    More about this item

    Keywords

    Matching theory; Market design; Labor market;
    All these keywords.

    JEL classification:

    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games

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