Lecture 12

Lecture 12 - Econ 102 Fall 2008 Lecture 12 Search...

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1 Econ 102 Fall 2008 Lecture 12 Search Equilibrium
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2 Social Planner and Equilibrium How does equilibrium work in a search market Firms and workers take wage and price as given They also take match probabilities as given
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3 Social Planner and Equilibrium There are two problems A lemons problem An externality
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4 The lemons problem Akerlof – informational asymmetry Used car market
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5 Externalities Pollution Coal technology may be inefficient No market for pollution rights
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6 Labor Market The labor market has both problems No firms to operate the search technology Informational asymmetry Many ways of matching workers with jobs
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7 Production vs Search Plowing a field 1 tractor 1 worker - capital intensive 20 workers with hoes – labor intensive Finding a job 100 recruiters 900 unemployed 900 unemployed 100 recruiters
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8 Search How does search work without a planner? We will review the environment from the last lecture
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9 Preferences The household gets utility from consumption The household gets no utility from leisure Everyone in the household participates in the labor market ( 29 u u C = This is the utility of the household C is consumption
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The Search Technology This is the search technology 1/ 2 1/ 2 L H V = H is the number of workers who search for a job V is the number of people in the firm who are allocated to the recruiting department. L
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This note was uploaded on 09/27/2009 for the course ECON 102 taught by Professor Serra during the Fall '08 term at UCLA.

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Lecture 12 - Econ 102 Fall 2008 Lecture 12 Search...

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