Working Paper: CEPR ID: DP1048
Authors: Melvyn G. Coles; Eric Smith
Abstract: This paper models equilibrium trading patterns when marketplaces exist and goods are differentiated. When first visiting the market, a buyer samples a stock of goods. If fortunate, the buyer matches with and purchases one of these goods and then exits the market. If an initial match does not exist, the buyer can now only match with the flow of new goods for sale. The previous stock has been sampled and rejected. In a steady state, the current stock of unmatched traders on one side of the market is trying to match with the flow of new traders on the other side. It is shown that this market behaviour describes matching patterns between unemployed job seekers and vacancies in UK Job Centres.
Keywords: matching; marketplaces; unemployment; hazards
JEL Codes: J64
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| flow of new vacancies (J63) | exit rates of the unemployed (J63) |
| stock of vacancies (J63) | exit rates of the unemployed (for less than one week) (J63) |
| stock of vacancies (J63) | exit rates of the unemployed (for more than four weeks) (J63) |
| current stock of unmatched job seekers (J68) | flow of new vacancies (J63) |
| time since posting vacancy (J63) | probability of vacancy being filled (J63) |
| matching dynamics (C69) | increasing returns to scale (O40) |