Works in Progress
Works in Progress
In a dynamic labour matching market, where the firm and worker pair arriving in each period may be a suitable match or a mismatch, there is a tradeoff between waiting for a more suitable match in the future and cost of being unemployed. We characterise the optimal policy that maximises expected social surplus. Our model shows that a strictly positive expected unemployment is efficient for markets with intermediate discount factor. There is no unemployment when the discount factor is sufficiently low and unemployment converges to zero when the discount factor is sufficiently high. We find market conditions under which the optimal policy that achieves the efficient allocation can be implemented via a direct mechanism.
We study dynamic task allocation and contracts for firms in a setting where employees transition from junior to senior positions through on-the-job training. There is a trade-off between lowered surplus today by senior workers delegating their hard tasks to juniors for on-the-job training against the benefit of a higher mass of seniors in the future. Seniors must additionally exert effort to delegate their hard tasks to juniors for on-the-job training. We use a principal-agent framework to characterise the firms’ optimal level of both on-the-job training and contract to incentivise the senior to delegate their tasks under observable and unobservable effort. We show that there is both weakly higher delegation and effort under the observable effort setting than unobservable effort setting.
This paper analyses and compares the efficiency and equity of different assignment mechanisms in a theoretical set up, modelling dynamic assignment of objects to queuing agents. At each time period, a new object is offered according to the assignment mechanism and agents choose whether to accept or reject the object. Applications of this model include waiting lists for elective surgeries at hospitals, social housing and schools. Under the queued to the back mechanism that I propose, the punishment upon rejecting the object, induces less selective behaviour by agents in the queue. Generally, the queued to the back mechanism achieves the desired balance between the first come first served and lottery mechanisms. The benefit of the queued to the back mechanism is that compared to mechanisms in the existing literature, the queued to the back mechanism can be applied to scenarios in which there is equal weight of importance on the characteristics: utility, fairness, misallocation and waste.