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

Wing Suen
Chinese University of Hong Kong

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.

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

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Last modified: 10/26/2007