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Investing in skill and searching for coworkers: endogenous participation in a matching market

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posted on 2024-11-14, 14:17 authored by Chris Bidner, Guillaume Roger, Jessica Moses
We demonstrate how search frictions have important yet subtle implications for participation in a skilled labor market by studying a model in which agents invest in skill prior to searching for coworkers. Search frictions induce the existence of acceptance-constrained equilibria, whereby matching concerns-as opposed to investment costs-dissuade the marginal agent from investing and participating in the skilled matching market. Such equilibria are robust, relevant, and have comparative static properties that contrast sharply with the intuitive properties arising in a benchmark static setting. We consider an extension with separate matching "marketplaces," and show that our main results continue to hold.

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Citation

Bidner, C., Roger, G. & Moses, J. (2016). Investing in skill and searching for coworkers: endogenous participation in a matching market. American Economic Journal: Microeconomics, 8 (1), 166-202.

Journal title

American Economic Journal Microeconomics

Volume

8

Issue

1

Pagination

166-202

Language

English

RIS ID

112291

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