Aggregation in Matching Markets

Abstract

This article develops aggregate relations for a matching market of heterogeneous suppliers and demanders. Under particular assumptions about the distribution of preferences and the matching game, asymptotic aggregate relations for the number of realized matches of different types in the presence of flexible contracts (such as a price) are derived. Simulation experiments demonstrate that the model also provides excellent predictions in small populations. The potential for applications within demographic, labor market, and welfare analyses is discussed.