Policy Analysis in Matching Markets
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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.
DepartmentMassachusetts Institute of Technology. Department of Economics
American Economic Review
American Economic Association
Agarwal, Nikhil. “Policy Analysis in Matching Markets.” American Economic Review, vol. 107, no. 5, May 2017, pp. 246–50.
Final published version