Essays in applied search theory

Adrian Mark Masters, University of Pennsylvania


Two separate research projects are included. In the first, a matching framework is used to examine the effect of search frictions on incentives to invest in human and physical capital. Coordination failures lead to inefficient levels of investment. Asymmetric production technologies cause individuals to move into less productive professions. Policies that encourage investment and motivate individuals to enter productive lines of business are prescribed. In the second research project, posting is used as a means of wage determination in a model of two-sided search. In the absence of side-payments, the wage is the only mechanism for transfer of utility within a match. This generates non-transferable components to match specific utility. In equilibrium, both firms and workers independently employ reservation behavior, even when the wage distribution is degenerate. This generates involuntary unemployment at a wage below that associated with perfect competition. Applied to minimum wage adjustments, the model predicts either positive or negative employment effects, depending on the extent to which the floor binds. An example, based on calibrated parameter values, is used to reconcile some recent, apparently contradictory, empirical results.

Subject Area

Economics|Labor economics|Economic theory

Recommended Citation

Masters, Adrian Mark, "Essays in applied search theory" (1995). Dissertations available from ProQuest. AAI9543121.