Investment Incentives in Labor Market Matching
نویسندگان
چکیده
In recent years, economists have become increasingly involved in the design of labor market clearinghouses. The design of a marketclearing mechanism affects not only the ex post allocation but also individuals’ ex ante choices, such as those regarding the amounts and types of human capital to acquire. In this paper, we provide an illustration of how the design of labor market–clearing mechanisms can affect incentives for human capital acquisition. Specifically, we show that the worker-optimal stable matching mechanism (Gale and Shapley 1962; Kelso and Crawford 1982; Hatfield and Milgrom 2005) incentivizes workers to make (nearly) efficient human capital investments. Our work extends the labor market matching model of Kelso and Crawford (1982) to incorporate the possibility that agents may invest in
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