KECD 2175 – Seminar
Matching markets: theory and applications
Sciences Po, M2 Economics and Public Policy, PhD track Spring 2014 (24h)
Instructor: Alfred Galichon
Schedule: Mondays, 8am-10am, starting January 20, 2013. Classes will meet Jan 20, 27, Feb 3, 10, 17, Mar 3, 10, 17, 24, 31, and Apr 7 and 14.
Location: D501 – 199 bld Saint-Germain.
Validation: A test will be organized during last class.
Description of the Course
The course will focus on the economic theory and the econometrics of matching and complementarities. It is intended to give the attendees an overview of the basic theory of matching with Transferable Utility, its testable implications, as well as its application to various fields such as labor economics, family economics, international trade and industrial organization. A particular emphasis is put on the empirical aspects and identification issues, and numerical methods will also be discussed. This course will not cover matching models without money and the Gale and Shapley algorithm (and applications such as the school choice problem, kidney exchanges) which will be covered in Sidartha Gordon’s Microeconomics 3 course.
Part I. Theory (9h)
1. Optimal matching and stability (9h). General introduction. Shapley-Shubik, welfare theorems. Network flows (time permitting). Optimization: theory and numerical methods.
Part II. Applications (15h)
2. The economics of the marriage market (5h). The Becker model. Choo and Siow’s model.
3. The economics of the labor market (5h). The Sattinger-Rosen “hedonic” approach. Rosen’s theory of superstars. CEO compensation.
4. International trade (5h). The Roy model. Ricardian models and Gravity revisited.