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Assortative matching through signals

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  • Poeschel, Friedrich

Abstract

When agents do not know where to find a match, they search. However, agents could direct their search to agents who strategically choose a certain signal. Introducing cheap talk to a model of sequential search with bargaining, we find that signals will be truthful if there are mild complementarities in match production: supermodularity of the match production function is a necessary and sufficient condition. It simultaneously ensures perfect positive assortative matching, so that single-crossing property and sorting condition coincide. As the information from signals allows agents to avoid all unnecessary search, this search model exhibits nearly unconstrained efficiency.

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  • Poeschel, Friedrich, 2013. "Assortative matching through signals," SFB 649 Discussion Papers 2013-044, Humboldt University Berlin, Collaborative Research Center 649: Economic Risk.
    • Handle: RePEc:zbw:sfb649:sfb649dp2013-044
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    1. Assortative matching through signals
      by Christian Zimmermann in NEP-DGE blog on 2013-01-20 05:06:20

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    2. Scholz, Theresa, 2012. "Employers' selection behavior during short-time work," IAB-Discussion Paper 201218, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    3. Dauth, Wolfgang & Südekum, Jens, 2012. "Profiles of local growth and industrial change : facts and an explanation," IAB-Discussion Paper 201220, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    4. Antoni, Manfred & Heineck, Guido, 2012. "Do literacy and numeracy pay off? On the relationship between basic skills and earnings," BERG Working Paper Series 86, Bamberg University, Bamberg Economic Research Group.
    5. Michael Stops, 2014. "Job matching across occupational labour markets," Oxford Economic Papers, Oxford University Press, vol. 66(4), pages 940-958.
    6. Münich, Daniel & Srholec, Martin & Moritz, Michael & Schäffler, Johannes, 2012. "Mothers and Daughters: Heterogeneity of German direct investments in the Czech Republic. Evidence from the IAB-ReLOC survey," IAB-Discussion Paper 201217, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    7. Blien, Uwe & Messmann, Susanne & Trappmann, Mark, 2012. "Do reservation wages react to regional unemployment?," IAB-Discussion Paper 201222, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    8. Carlos Canon, 2011. "Matching & Information Provision by One-Sided and Two-Sided Platforms," Working Papers 11-20, NET Institute, revised Oct 2011.

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    More about this item

    Keywords

    assortative matching; sorting; search; signals; information;
    All these keywords.

    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory

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