Working Paper: NBER ID: w9467
Authors: C. Nicholas McKinney; Muriel Niederle; Alvin E. Roth
Abstract: The collapse of the clearinghouse for the entry-level gastroenterology labor market offers a unique opportunity to study how stable clearinghouses succeed and fail. To explore the reasons for the failure of the clearinghouse (and why failures of this kind of clearinghouse have been so rare), we conduct an experimental investigation of demand shocks of the kind that occurred in the gastroenterology market. We find that a reduction in demand for positions leads to the collapse of the match only when it is detectable by firms before being detected by workers (as in the unexpected shock that took place in 1996, which could be seen by firms in their reduced applicant pools). Simple demand and supply imbalances do not seem to interfere with the operation of the centralized match. Our results suggest an affirmative answer to the question posed by market participants about whether the clearinghouse could be successfully restarted, and that this would relieve some of the distress now reported in that market, by allowing it to operate later, at a more uniform time, and with more national scope.
Keywords: medical labor clearinghouse; gastroenterology labor market; demand shocks; centralized matching
JEL Codes: I0; J0
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Reduction in demand for positions (J23) | Collapse of the match (C78) |
| Firms' awareness of reduced applicant pool (J79) | Preemptive collapse of the match (D74) |
| Demand shock (J23) | Decline in centralized match's effectiveness (C78) |
| Surplus of applicants (J23) | Successful functioning of centralized match (C78) |
| 1996 demand shock (E65) | Breakdown of the match process by 2000 (C78) |