Working Paper: CEPR ID: DP7858
Authors: Alfred Galichon; Bernard Salani
Abstract: We investigate in this paper the theory and econometrics of optimal matchings with competing criteria. The surplus from a marriage match, for instance, may depend both on the incomes and on the educations of the partners, as well as on characteristics that the analyst does not observe. The social optimum must therefore trade off matching on incomes and matching on educations. Given a flexible specification of the surplus function, we characterize under mild assumptions the properties of the set of feasible matchings and of the socially optimal matching. Then we show how data on the covariation of the types of the partners in observed matches can be used to estimate the parameters that define social preferences over matches. We provide both nonparametric and parametric procedures that are very easy to use in applications.
Keywords: assignment; marriage; matching
JEL Codes: C13; C78; D61
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| surplus created by a match (C78) | function of observable types (C67) |
| surplus created by a match (C78) | function of unobservable types (C29) |
| observable characteristics (C90) | surplus function (E23) |
| optimal matching (C78) | trade off assortative matching along multiple dimensions (C78) |
| observed matching (C90) | maximizes linear combination of observable surplus and mutual information (D89) |
| optimization of matching patterns (C61) | surplus function (E23) |