Simultaneous Search with Heterogeneous Firms and Ex Post Competition

IZA Discussion Paper No. 2056

Tinbergen Institute Discussion Paper No. 06-032/3

37 Pages Posted: 5 Apr 2006

See all articles by Pieter A. Gautier

Pieter A. Gautier

Free University of Amsterdam; Tinbergen Institute Amsterdam (TIA); IZA Institute of Labor Economics

Ronald P. Wolthoff

University of Toronto - Department of Economics; IZA Institute of Labor Economics

Multiple version iconThere are 2 versions of this paper

Date Written: March 2006

Abstract

We study a search model where workers can send multiple applications to high and low productivity firms. Firms that compete for the same candidate can increase their wage offers as often as they like. We show that there is a unique equilibrium where workers mix between sending both applications to the high and both to the low productivity sector. Efficiency requires however that they apply to both sectors because then the coordination frictions are lowest. For many configurations, the equilibrium outcomes are the same under directed and random search. Allowing for free entry creates a second source of inefficiency.

Keywords: directed search, efficiency, coordination frictions

JEL Classification: D83, E24, J23, J24, J64

Suggested Citation

Gautier, Pieter A. and Wolthoff, Ronald P. and Wolthoff, Ronald P., Simultaneous Search with Heterogeneous Firms and Ex Post Competition (March 2006). IZA Discussion Paper No. 2056, Tinbergen Institute Discussion Paper No. 06-032/3, Available at SSRN: https://ssrn.com/abstract=894872 or http://dx.doi.org/10.2139/ssrn.894872

Pieter A. Gautier (Contact Author)

Free University of Amsterdam ( email )

Amsterdam, ND North Holland
Netherlands

Tinbergen Institute Amsterdam (TIA) ( email )

Gustav Mahlerplein 117
Amsterdam, 1082 MS
Netherlands

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Ronald P. Wolthoff

University of Toronto - Department of Economics ( email )

150 St. George Street
Toronto, Ontario M5S 3G7
Canada

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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