published in: Economics Letters, 2010, 106 (1), 48-50
We show that in a search/matching model with endogenous participation in which workers are heterogeneous with respect to market productivity, satisfying the Hosios rule leads to excessive vacancy creation. The reason is that the marginal worker does not internalize the effect of his or her participation on average productivity.
We use Google Analytics in compliance with German Data Protection Law. The site gathers data for the sole purpose of improving its services. You're able to decline now or later. By using our services, you agree to our use of cookies. You'll find more information here.