Thomas Gall, Patrick Legros, Andrew Newman
Journal of the European Economic Association (Proceedings), Volume 4, Issue 2-3, May 2006, 427-432
Publication year: 2006

We study an assignment with investment model to higlight a tradeoff between investment in human capital before (ex-ante system) and after (ex-post system) matching on the labor market. The ex-post system is better at coordinating investment within firms while the ex-ante system is better at reducing mismatches. We further show that the ability to transfer surplus within firms affects mismatches and the relative performance of the two systems. At high degrees of transferability they are equivalent but when transferability is very low the ex-post system outperforms the ex-ante system while with moderate transferability the reverse is true.


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