The probability of finding a job in the two-sided search model is
A) decreasing in the efficiency of the matching function.
B) increasing in market tightness.
C) increasing in the ratio of consumers searching to firms.
D) decreasing in market tightness.
E) constant across all levels of market tightness.

Question

Quizplus · Accepted Answer

In the two-sided search model, the probability of finding a job is increasing in market tightness. Market tightness is defined as the ratio of vacant positions to job seekers, and as this ratio decreases (tighter market), the probability of finding a job increases. This is because there are more opportunities available for job seekers and fewer competitors for each job opening. Therefore, B is the best choice.

The Probability of Finding a Job in the Two-Sided Search