Title: Limit your applications. Dealing with congested markets in the matching procedure

Authors: Janine Balter; Michela Rancan; Olena Senyuta

Addresses: EUI and Saarland University, 66123 Saarbrücken, Germany ' EUI and European Commission, Directorate General Joint Research Centre, Via E. Fermi, 2749 I-21027 Ispra (Varese), Italy ' EUI and CERGE-EI, Charles University, Politickych veznu 7, 111 21, Prague, Czech Republic

Abstract: We study congested matching markets, such as the PhD academic job market, and consider alternative mechanisms that could be implemented by a social planner. Building on the Gale and Shapley algorithm, we analyse (i) a procedure accounting for a limit in the number of applications PhD graduates can submit (PhD-LIMIT), and (ii) a procedure accounting for a limit in the number of applications universities can evaluate (UNI-LIMIT).We find that the PhD-LIMIT procedure improves the matching outcome and is preferable to a UNI-LIMIT procedure. The optimal limit in the number of applications balances the trade-off between being unmatched and gaining a better match in the aggregate, and the benefit can be considerable if the graduates' preferences over the positions are not very correlated. Overall, we suggest a direction to improve the matching market for PhD candidates by improving the outcome of their matches and lowering the hiring costs for universities.

Keywords: matching markets; truncation; Gale-Shapley deferred acceptance; congested markets; PhD academic job market; PhD graduates; graduate preferences; university hiring costs.

DOI: 10.1504/IJCEE.2016.079534

International Journal of Computational Economics and Econometrics, 2016 Vol.6 No.4, pp.413 - 431

Received: 06 May 2015
Accepted: 09 Nov 2015

Published online: 30 Sep 2016 *

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