{"title":"Labor market efficiency: output as the measure of welfare","authors":"Behrang Kamali Shahdadi","doi":"10.1007/s00355-023-01496-w","DOIUrl":null,"url":null,"abstract":"<p>We study the matching of workers to firms in which workers choose an observable and contractable effort after the match. If there are complementarities between a worker’s ability and a firm’s technology, positive assortative matching (PAM) is the only matching in any equilibrium and is the unique efficient matching. We investigate the effect of a policy that changes the matching of firms to workers from any matching to PAM, such as implementing a centralized clearing house. We characterize two sets of sufficient conditions on the production and cost functions under which the total output and welfare both increase. Under the first set of conditions, the increase in total output is an upper bound for the efficiency gain. In contrast, under the second set of conditions, the increase in total output is a lower bound for the efficiency gain. We identify a third set of conditions under which the total output decreases while welfare increases.</p>","PeriodicalId":47663,"journal":{"name":"Social Choice and Welfare","volume":"86 1","pages":""},"PeriodicalIF":0.5000,"publicationDate":"2023-12-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Social Choice and Welfare","FirstCategoryId":"96","ListUrlMain":"https://doi.org/10.1007/s00355-023-01496-w","RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q4","JCRName":"ECONOMICS","Score":null,"Total":0}
引用次数: 0
Abstract
We study the matching of workers to firms in which workers choose an observable and contractable effort after the match. If there are complementarities between a worker’s ability and a firm’s technology, positive assortative matching (PAM) is the only matching in any equilibrium and is the unique efficient matching. We investigate the effect of a policy that changes the matching of firms to workers from any matching to PAM, such as implementing a centralized clearing house. We characterize two sets of sufficient conditions on the production and cost functions under which the total output and welfare both increase. Under the first set of conditions, the increase in total output is an upper bound for the efficiency gain. In contrast, under the second set of conditions, the increase in total output is a lower bound for the efficiency gain. We identify a third set of conditions under which the total output decreases while welfare increases.
期刊介绍：
Social Choice and Welfare explores all aspects, both normative and positive, of welfare economics, collective choice, and strategic interaction. Topics include but are not limited to: preference aggregation, welfare criteria, fairness, justice and equity, rights, inequality and poverty measurement, voting and elections, political games, coalition formation, public goods, mechanism design, networks, matching, optimal taxation, cost-benefit analysis, computational social choice, judgement aggregation, market design, behavioral welfare economics, subjective well-being studies and experimental investigations related to social choice and voting. As such, the journal is inter-disciplinary and cuts across the boundaries of economics, political science, philosophy, and mathematics. Articles on choice and order theory that include results that can be applied to the above topics are also included in the journal. While it emphasizes theory, the journal also publishes empirical work in the subject area reflecting cross-fertilizing between theoretical and empirical research. Readers will find original research articles, surveys, and book reviews.Officially cited as: Soc Choice Welf
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