Knowledge that Transforms

We argue that models coming from a variety of fields, such as matching models and discrete choice models among others, share a common structure that we call matching function equilibria with partial assignment. This structure includes an aggregate matching function and a system of nonlinear equations. We provide a proof of existence and uniqueness of an equilibrium and propose an efficient algorithm to compute it. For a subclass of matching models, we also develop a new parameter-free approach for constructing the counterfactual matching equilibrium. It has the advantage of not requiring parametric estimation when computing counterfactuals. We use our procedure to analyze the impact of the elimination of the Social Security Student Benefit Program in 1982 on the marriage market in the United States. We estimate several candidate models from our general class of matching functions and select the best fitting model using information based criterion.

This study investigates the impact of state-level Worker Adjustment and Retraining Notification (WARN) Acts on advance notice and post-displacement labor market outcomes for U.S. workers from 1993 to 2019. State WARN adoption increases the likelihood of receiving 30+ days of notice by about 4 percentage points. Instrumental variables estimates, supplemented with local average response functions to address weak instruments, show that lengthy notice reduces immediate joblessness by 4 to 7 percentage points. The effects are most pronounced for low-skill workers. Longer term outcomes are less robust. The results indicate that enforceable mandates improve short run transitions, particularly for vulnerable workers.