The Assignment of Workers to Jobs in an Economy with Coordination Frictions

This paper studies the assignment of heterogeneous workers to heterogeneous jobs. Owing to the anonymity of a large labor market, workers use mixed strategies when applying for jobs. This randomness generates coordination frictions. Two workers may apply for a particular job, whereas an identical jo...

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Bibliographic Details
Published in:The Journal of political economy 2005-10, Vol.113 (5), p.996-1025
Main Author: Shimer, Robert
Format: Article
Language:English
Subjects:
Comparative advantage
Competitive equilibrium
Decentralization
Economic Factors
Economic impact
Economic models
Economic theory
Employees
Hiring
Job Applicants
Job Application
Job hunting
Job Placement
Labor economics
Labor Market
Labor Supply
Labour market
Marginal value
Political economy
Production functions
Productivity
Regression analysis
Studies
Unemployment
Wages
Welfare
Workers
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Summary:This paper studies the assignment of heterogeneous workers to heterogeneous jobs. Owing to the anonymity of a large labor market, workers use mixed strategies when applying for jobs. This randomness generates coordination frictions. Two workers may apply for a particular job, whereas an identical job gets no applications. The model generates assortative matching, with a positive but imperfect correlation between matched workers’ and firms’ types. It predicts that a worker’s wage is increasing in her job’s productivity and a firm’s profit is increasing in its employees’ productivity. The model also yields a version of the welfare theorems.
ISSN:0022-3808
1537-534X
DOI:10.1086/444551