Equilibrium Directed Search with Multiple Applications
Georgetown University - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute); Institute for the Study of Labor (IZA)
Pieter A. Gautier
Free University of Amsterdam; Tinbergen Institute Amsterdam (TIA); Institute for the Study of Labor (IZA)
Georgetown University; Institute for the Study of Labor (IZA)
IZA Discussion Paper No. 719
We analyze a model of directed search in which unemployed job seekers observe all posted wages. We allow for the possibility of multiple applications by workers and ex post competition among vacancies. For any number of applications, there is a unique symmetric equilibrium in which vacancies post a common wage. When workers apply to only one vacancy, a single wage is paid and the resulting equilibrium is efficient. When workers make multiple applications, there is dispersion in wages paid, and equilibrium may be inefficient. We show that our results also hold in a steady-state version of the model.
Number of Pages in PDF File: 31
Keywords: Job Search, Directed Search, Matching
JEL Classification: J64, D83, J41
Date posted: March 13, 2003
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