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Title: Signals in two-sided search
Author: Poeschel, Friedrich Gerd
Awarding Body: University of Oxford
Current Institution: University of Oxford
Date of Award: 2011
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We introduce signals to search models of two-sided matching markets and explore the implications for efficiency. In a labour market model in which firms can advertise wages and workers can choose effort, we find that advertisements can help overcome the Diamond paradox. Advertisements fix workers' beliefs, so that workers will react if firms renege on advertisements. Firms then prefer to advertise truthfully. Next, we consider a market with two-sided heterogeneity in which types are only privately observable. We identify a simple condition on the match output function for agents to signal their types truthfully and for the matching to exhibit positive assortative matching despite search frictions. While our theoretical work implies that the efficiency of matching increases as information technology spreads, empirical matching functions typically suggest that it declines. By estimating more general matching functions, we show that the result of declining efficiency can partly be attributed to omitted variable bias.
Supervisor: Keller, Godfrey ; Postel-Vinay, Fabien Sponsor: Economic and Social Research Council
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available
Keywords: Economics ; Labour economics ; search ; matching ; signals ; Diamond paradox ; sorting ; matching function