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Search, Screening and Sorting

Author

Listed:
  • Xiaoming Cai

    (Peking University)

  • Pieter Gautier

    (Vrije Universiteit Amsterdam)

  • Ronald Wolthoff

    (University of Toronto)

Abstract

We investigate the effect of search frictions on labor market sorting by constructing a model which is in line with recent evidence that employers collect a pool of applicants before interviewing a subset of them. In this environment, we derive the necessary and sufficient conditions for sorting in applications as well as matches. We show that positive sorting is obtained when production complementarities outweigh a force against sorting measured by a quality-quantity elasticity. Interestingly, we find that the required degree of production complementarity for positive sorting is increasing in the number of interviews: it ranges from square-root-supermodularity if each firm can interview a single applicant to log-supermodularity if each firm can interview all its applicants.

Suggested Citation

  • Xiaoming Cai & Pieter Gautier & Ronald Wolthoff, 2021. "Search, Screening and Sorting," Tinbergen Institute Discussion Papers 21-058/VI, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20210058
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    References listed on IDEAS

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    Cited by:

    1. Horton, John J. & Johari, Ramesh & Kircher, Philipp, 2021. "Cheap Talk Messages for Market Design: Theory and Evidence from a Labor Market with Directed," LIDAM Discussion Papers CORE 2021033, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    2. Banfi, Stefano & Choi, Sekyu & Villena-Roldán, Benjamín, 2022. "Sorting on-line and on-time," European Economic Review, Elsevier, vol. 146(C).

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    More about this item

    Keywords

    sorting; complementarity; search frictions; information frictions; heterogeneity;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

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