Complementarities and Substitutabilities in Matching Models

Name: Complementarities and Substitutabilities in Matching Models
Brand: Vita e Pensiero
Price: 6.00 EUR
Availability: OnlineOnly

digital

Article

Magazine

RIVISTA INTERNAZIONALE DI SCIENZE SOCIALI

Issue

RIVISTA INTERNAZIONALE DI SCIENZE SOCIALI - 2008 - 2

Title

Complementarities and Substitutabilities in Matching Models

Author

Gabriele Cardullo

Publisher

Vita e Pensiero

Format

Article |

Pdf

Pages

Online from

02-2008

Issn

0035-676X (print) | 1827-7918 (digital)

€ 6.00

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Description

In a standard search and matching model the labor market presents frictions while in the competitive product market the demand is infinitely elastic. To have a more realistic framework, some macroeconomic models abandon the assumption of infinite elasticity and consider a two-tier productive scheme in the goods market. In this paper, it is shown that, under some reasonable assumptions about the final goods production function (for instance Cobb-Douglas technology) the unique equilibrium of this kind of model features no production and full unemployment, making them useless for any policy analysis. A comparison between the two frameworks shows that a standard matching model overestimates the impact in terms of employment of any policy intervention in the sector where such a policy has been promoted, while at the same time it ignores the effects that emerge in other sectors of the economy.