Title: The Comparative Statics of Differential Rents in Two-Sided Matching Markets
Reference Number: 1147
Publication Date: September 2005
Author(s):

Wing Suen
Chinese University of Hong Kong

Abstract:
This paper studies how shifts in the distribution of quality on one side of the market affects earnings on the other side in a model of one-to-one matching. A more dispersed distribution of quality hurts the low ability agents on the other side because they are matched to inferior partners. Earnings being a differential rent in these markets, this pulls down the earnings of high quality agents as well. It is shown that a more dispersed ability distribution reduces total earnings on the opposite side of the market. Under some conditions, all agents on that side are hurt.

More:
Published in Journal of Economic Inequality 5 (October 2006), pp. 149-158.

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Last modified: 10/26/2007