. Moreover, it is shown that the neglect of endogenous but not observable behavior in the empirical literature on labor matching … leads to systematically biased estimates of the matching elasticities, posing a caveat on the results of previous studies … testing for constant returns of the matching function. The theoretical model presented allows to predict the direction of the …

's. The paper compares the predictions of the signaling and human capital models in response to an exogenous demand shock … hypotheses are derived. The findings suggest that the signaling model may indeed predict the observed changes in the schooling …