Firing the Wrong Workers: Financing Constraints and Labour Misallocation

Recognition Program

Authors: Andrea Caggese, Vicente Cuñat and Daniel Metzger

Journal of Financial Economics, Vol. 133, No 3, 589-607, September, 2019

This paper deals with roommate problems (Gale and Shapley, Am Math Mon 69(1):9–15, 1962) that are solvable, i.e., have a non-empty core (set of stable matchings). We study rank-fairness within pairs of stable matchings and the size of the core by means of maximal and average rank gaps. We provide upper bounds in terms of maximal and average disagreements in the agents’ rankings. Finally, we show that most of our bounds are tight.

This paper originally appeared as Barcelona School of Economics Working Paper 1057
This paper is acknowledged by the Barcelona School of Economics Recognition Program