Review of Economic Studies Vol. 73 No. 4 2006
Equilibrium Directed Search with Multiple Applications
Abstract
We analyse a model of equilibrium directed search in a large labour market. Each worker, observing the wages posted at all vacancies, makes a fixed, finite number of applications, a. We allow for the possibility of ex post competition should more than one vacancy want to hire the same worker. For each a, there is a unique symmetric equilibrium in which all vacancies post the same wage. When a =1, the common posted wage lies between the competitive and monopsony levels, and equilibrium is efficient. When a > 1, all vacancies post the monopsony wage. Some workers fail to find a job, some find a job at the monopsony wage, and some - those for whom there is competition - get the competitive wage. Equilibrium is inefficient when a > 1; in particular, there is excessive vacancy creation.
- DOI
- 10.1111/j.1467-937x.2006.00400.x
- Volume
- 73
- Issue
- 4
- Pages
- 869-891
- Language
- en
- Sources
- openalex crossref bibtex:phds-export.bib openalex