Matching Unskilled/Skilled Workers to Firms Facing Budget Constraints

Abstract

We study a matching model in which firms face budget constraints. If the pro-duction function only depends on a firm’s technology, a weak stable matching always exists; furthermore, when a strong stable matching does not exist, there is a nearby budget vector for firms such that a strong stable matching exists for the problem with perturbed budgets. If the production function is multiplicative, one can reach a strong stable matching by changing the budget of firms such that the total budget remains the same and each firm’s budget change is bounded by the value of at most one worker for that firm.

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Reference

Amirreza Ahmadzadeh, and Behrang Kamali-Shahdadi, “Matching Unskilled/Skilled Workers to Firms Facing Budget Constraints”, TSE Working Paper, n. 23-1446, June 2023.