Authors: Bulow, Jeremy; Levin, Jonathan

Source: The American Economic Review, Volume 96, Number 3, June 2006 , pp. 652-668(17)

Publisher: American Economic Association

Abstract:

We develop a model in which firms set impersonal salary levels before matching with workers. Wages fall relative to any competitive equilibrium while profits rise almost as much, implying little inefficiency. Furthermore, the best firms gain the most from the system while wages become compressed. In light of our results, we discuss the performance of alternative institutions and the recent antitrust case against the National Resident Matching Program.

Document Type: Research article

Publication date: 2006-06-01

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• The American Economic Review is a general-interest economics journal. The journal is published quarterly and contains articles on a broad range of topics. Established in 1911, the AER is among the nation's oldest and most respected scholarly journals in the economics profession.
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