Question: Labor markets are "matching markets," in which prospective employees are ultimately matched with job vacancies, and the quality of the match has a large impact on its productivity.
a. Economists and sociologists interested in family behavior now often speak of a "marriage market," in which prospective partners attempt to display their desirability and make matches on the basis of an information search. In what ways does a marriage market resemble a labor market, and in what ways does it not?
b. Some marriage markets actually involve cash payments (i.e., dowries) from one partner's (usually the woman's) family to the other's. What might be the economic function of dowries? Could they be like insurance policies or performance bonds? (Check the discussion of engagement rings in Chapter 10.)
c. We can also think of a market for admissions to selective colleges. Why don't such colleges simply sell space to the highest bidders? (Wrong answer: because only the wealthy will attend. Why is it wrong?)
d. In the past 20 years, many colleges have chosen to use a standardized common application form that includes the same questions, essays, and so on. When might a common application improve the quality of matches? When might it lower that quality?