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Directed search, mismatch and efficiency

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  • Frédéric Gavrel

    (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique)

Abstract

This short paper provides a directed search model of the labor market in which the persistency of vacant jobs results from a mismatch problem, not from a pure coordination problem. Since firms cannot commit to an output cutoff lower than the posted wage, laissez-faire is inefficient. But, under a binding condition, public policy can restore market efficiency by associating a minimum wage with a layoff tax.

Suggested Citation

  • Frédéric Gavrel, 2019. "Directed search, mismatch and efficiency," Working Papers halshs-02083453, HAL.
    • Handle: RePEc:hal:wpaper:halshs-02083453
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-02083453
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    References listed on IDEAS

    as
    1. Gavrel, Frédéric, 2012. "On the inefficiency of matching models of unemployment with heterogeneous workers and jobs when firms rank their applicants," European Economic Review, Elsevier, vol. 56(8), pages 1746-1758.
    2. James Albrecht & Pieter A. Gautier & Susan Vroman, 2006. "Equilibrium Directed Search with Multiple Applications," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 73(4), pages 869-891.
    3. Olivier J. Blanchard & Jean Tirole, 2008. "The Joint Design of Unemployment Insurance and Employment Protection: A First Pass," Journal of the European Economic Association, MIT Press, vol. 6(1), pages 45-77, March.
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    6. Frédéric Gavrel, 2018. "The magic of layoff taxes requires equilibrium stability," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 25(2), pages 404-411, April.
    7. Kenneth Burdett & Shouyong Shi & Randall Wright, 2001. "Pricing and Matching with Frictions," Journal of Political Economy, University of Chicago Press, vol. 109(5), pages 1060-1085, October.
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    13. Mangin, Sephorah & Julien, Benoît, 2021. "Efficiency in search and matching models: A generalized Hosios condition," Journal of Economic Theory, Elsevier, vol. 193(C).
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    Keywords

    Directed search; Mismatch; Efficiency; Layoff tax;
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