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  3. American Economic Review
  4. May 2017
  5. Policy Analysis in Matching Markets

American Economic Review

ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)

Policy Analysis in Matching Markets

  • Nikhil Agarwal
American Economic Review
vol. 107, no. 5, May 2017
(pp. 246–50)
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Abstract

Price and quantity interventions intended to affect assignments are common in many labor and education markets (e.g., financial aid, quotas). This article discusses an empirical framework, based on the theory of stable matching, that is suitable for policy analysis while accounting for the presence of equilibrium sorting. It then compares financial incentives and supply interventions for encouraging the training of family medicine residents in rural America. Due to equilibrium effects, the primary effect of financial incentives is to increase the quality, not numbers, of residents in rural programs, while quantity regulations directly affect numbers without adversely affecting quality.

Citation

Agarwal, Nikhil. 2017. "Policy Analysis in Matching Markets." American Economic Review, 107 (5): 246–50. DOI: 10.1257/aer.p20171112

Additional Materials

JEL Classification

  • C78 Bargaining Theory; Matching Theory
  • I11 Analysis of Health Care Markets
  • I18 Health: Government Policy; Regulation; Public Health
  • J24 Human Capital; Skills; Occupational Choice; Labor Productivity
  • J44 Professional Labor Markets; Occupational Licensing