Mismatch, rematch, and investment
Mismatch, rematch, and investment
This paper studies rigidities in sharing joint payoffs (non-transferability) as a source of excessive segregation in labor or education markets. The resulting distortions in ex-ante investments, such as education acquisition, link such mismatches to the possibility of simultaneous under-investment by the underprivileged and over-investment by the privileged. This creates an economic rationale for rematch policies like affirmative action, which have to be evaluated in terms of both incentives and the assignment quality. We compare a number of such policies that have empirical counterparts. Our results indicate that some of these policies can be beneficial on both equity and efficiency grounds.
University of Southampton
Gall, Thomas
8df67f3d-fe3c-4a3f-8ce7-e2090557fcd4
Legros, Patrick
4a893422-520b-4be2-a2ec-1880676cfbe4
Newman, Andrew
f94d1de7-e8f5-43c4-827d-0e2383aa784d
February 2012
Gall, Thomas
8df67f3d-fe3c-4a3f-8ce7-e2090557fcd4
Legros, Patrick
4a893422-520b-4be2-a2ec-1880676cfbe4
Newman, Andrew
f94d1de7-e8f5-43c4-827d-0e2383aa784d
Gall, Thomas, Legros, Patrick and Newman, Andrew
(2012)
Mismatch, rematch, and investment
(Discussion Papers in Economics and Econometrics, 189)
Southampton, GB.
University of Southampton
39pp.
Record type:
Monograph
(Working Paper)
Abstract
This paper studies rigidities in sharing joint payoffs (non-transferability) as a source of excessive segregation in labor or education markets. The resulting distortions in ex-ante investments, such as education acquisition, link such mismatches to the possibility of simultaneous under-investment by the underprivileged and over-investment by the privileged. This creates an economic rationale for rematch policies like affirmative action, which have to be evaluated in terms of both incentives and the assignment quality. We compare a number of such policies that have empirical counterparts. Our results indicate that some of these policies can be beneficial on both equity and efficiency grounds.
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Published date: February 2012
Organisations:
Economics
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Local EPrints ID: 348658
URI: http://eprints.soton.ac.uk/id/eprint/348658
PURE UUID: b6ef1c19-c0df-4ca3-a6e5-4de2807245b4
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Date deposited: 21 Feb 2013 11:49
Last modified: 15 Mar 2024 03:46
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Contributors
Author:
Patrick Legros
Author:
Andrew Newman
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