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Complementary jobs and optimal matching
Author(s) -
Gebauer Markus
Publication year - 2021
Publication title -
labour
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.403
H-Index - 34
eISSN - 1467-9914
pISSN - 1121-7081
DOI - 10.1111/labr.12204
Subject(s) - externality , matching (statistics) , task (project management) , bargaining problem , microeconomics , economics , nash equilibrium , computer science , labour economics , mathematics , statistics , management
This paper introduces strong complementarities in labour into an otherwise classical Diamond–Mortensen–Pissarides search model. Specifically, two workers are required to perform a task. The assumption of Nash bargaining is maintained to represent the Hosios condition transparently. We show that this setup leads to additional externalities that require more than a Hosios‐style condition to be met. The surplus must be shared between the workers so that the employer internalizes additional externalities. This makes implementing efficiency even more challenging.