The collapse of a medical clearinghouse (and why such failures are rare)

C. Nicholas McKinney, Muriel Niederle, Alvin E. Roth

NBER Working Paper No. 9467
Issued in February 2003
NBER Program(s):Labor Studies

The collapse of the clearinghouse for the entry-level gastroenterology labor market offers a unique opportunity to study how stable clearinghouses succeed and fail. To explore the reasons for the failure of the clearinghouse (and why failures of this kind of clearinghouse have been so rare), we conduct an experimental investigation of demand shocks of the kind that occurred in the gastroenterology market. We find that a reduction in demand for positions leads to the collapse of the match only when it is detectable by firms before being detected by workers (as in the unexpected shock that took place in 1996, which could be seen by firms in their reduced applicant pools). Simple demand and supply imbalances do not seem to interfere with the operation of the centralized match. Our results suggest an affirmative answer to the question posed by market participants about whether the clearinghouse could be successfully restarted, and that this would relieve some of the distress now reported in that market, by allowing it to operate later, at a more uniform time, and with more national scope.

download in pdf format
   (1152 K)

email paper

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w9467

Published: McKinney, C. Nicholas, Muriel Niederle and Alvin E. Roth. “The Collapse of a Medical Labor Clearinghouse (and Why Such Failures are Rare).” The American Economic Review 95, 3 (June 2005): 878-889.

Users who downloaded this paper also downloaded* these:
Kaushal, Gao, and Waldfogel w12624 Welfare Reform and Family Expenditures: How are Single Mothers Adapting to the New Welfare and Work Regime?
Niederle and Roth w8616 Unraveling Reduces the Scope of an Entry Level Labor Market: Gastroenterology With and Without a Centralized Match
Niederle and Roth w13529 The Effects of a Centralized Clearinghouse on Job Placement, Wages, and Hiring Practices
Avery, Jolls, Posner, and Roth w13213 The New Market for Federal Judicial Law Clerks
Ostrovsky and Schwarz w13766 Information Disclosure and Unraveling in Matching Markets
NBER Videos

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email:

Contact Us