The Walras-Bowley Lecture: Fragmentation of Matching Markets and How Economics Can Help Integrate Them
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arXiv
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| Natura: | Preprint |
| Pubblicazione: |
2025
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| _version_ | 1866909756864593920 |
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| author | Kamada, Yuichiro Kojima, Fuhito Matsushita, Akira |
| author_facet | Kamada, Yuichiro Kojima, Fuhito Matsushita, Akira |
| contents | Fragmentation of matching markets is a ubiquitous problem across countries and across applications. In order to study the implications of fragmentation and possibilities for integration, we first document and discuss a variety of fragmentation cases in practice such as school choice, medical residency matching, and so forth. Using the real-life dataset of daycare matching markets in Japan, we then empirically evaluate the impact of interregional transfer of students by estimating student utility functions under a variety of specifications and then using them for counterfactual simulation. Our simulation compares a fully integrated market and a partially integrated one with a "balancedness" constraint -- for each region, the inflow of students from the other regions must be equal to the outflow to the other areas. We find that partial integration achieves 39.2 to 59.6% of the increase in the child welfare that can be attained under full integration, which is equivalent to a 3.3 to 4.9% reduction of travel time. The percentage decrease in the unmatch rate is 40.0 to 52.8% under partial integration compared to the case of full integration. The results suggest that even in environments where full integration is not a realistic option, partial integration, i.e., integration that respects the balancedness constraint, has a potential to recover a nontrivial portion of the loss from fragmentation. |
| format | Preprint |
| id |
arxiv_https___arxiv_org_abs_2508_19628 |
| institution | arXiv |
| publishDate | 2025 |
| record_format | arxiv |
| spellingShingle | The Walras-Bowley Lecture: Fragmentation of Matching Markets and How Economics Can Help Integrate Them Kamada, Yuichiro Kojima, Fuhito Matsushita, Akira General Economics Economics Fragmentation of matching markets is a ubiquitous problem across countries and across applications. In order to study the implications of fragmentation and possibilities for integration, we first document and discuss a variety of fragmentation cases in practice such as school choice, medical residency matching, and so forth. Using the real-life dataset of daycare matching markets in Japan, we then empirically evaluate the impact of interregional transfer of students by estimating student utility functions under a variety of specifications and then using them for counterfactual simulation. Our simulation compares a fully integrated market and a partially integrated one with a "balancedness" constraint -- for each region, the inflow of students from the other regions must be equal to the outflow to the other areas. We find that partial integration achieves 39.2 to 59.6% of the increase in the child welfare that can be attained under full integration, which is equivalent to a 3.3 to 4.9% reduction of travel time. The percentage decrease in the unmatch rate is 40.0 to 52.8% under partial integration compared to the case of full integration. The results suggest that even in environments where full integration is not a realistic option, partial integration, i.e., integration that respects the balancedness constraint, has a potential to recover a nontrivial portion of the loss from fragmentation. |
| title | The Walras-Bowley Lecture: Fragmentation of Matching Markets and How Economics Can Help Integrate Them |
| topic | General Economics Economics |
| url | https://arxiv.org/abs/2508.19628 |