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Published January 2017 | Published
Journal Article Open

Job security, stability, and production efficiency

Abstract

We study a two-sided matching market with a set of heterogeneous firms and workers in an environment where jobs are secured by regulation. Without job security Kelso and Crawford have shown that stable outcomes and efficiency prevail when all workers are gross substitutes to each firm. It turns out that by introducing job security, stability and efficiency may still prevail, and even for a significantly broader class of production functions.

Additional Information

© 2017 The Authors. Theoretical Economics. The Econometric Society. Licensed under the Creative Commons Attribution-NonCommercial License 3.0. Manuscript received 6 November, 2014; final version accepted 6 December, 2015; available online 7 December, 2015. We thank a co-editor and the referees for helpful advice. We also thank Eddie Dekel, Fuhito Kojima, Regis Renault, Ilya Segal, Tayfun Sönmez, Utku Ünver, Yoram Weiss, and seminar participants in Northwestern, Helsinki, Toulouse, Paris–Dauphine, Technion, and the Hebrew University. This work was supported by USA–Israel Binational Science Foundation Grant 2006-239, NSF Grant AF-0910940, Marie Curie Advance AGT fellowship, ISF Grant 2016301, the joint Microsoft–Technion e-Commerce Lab, Technion VPR grants, and the Bernard M. Gordon Center for Systems Engineering at the Technion. This work was done while H. Fu was a Ph.D. student in the Computer Science Department at Cornell University and a postdoc at Microsoft Research New England. R. Lavi is supported by a Marie Curie IOF fellowship, Advance-AGT.

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August 19, 2023
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