Equilibrium Directed Search with Multiple applications

P.A. Gautier, J. Albrecht, S. Vroman

Research output: Contribution to JournalArticleAcademic

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. © 2006 The Review of Economic Studies Limited.
Original languageEnglish
Pages (from-to)869-891
Number of pages23
JournalReview of Economic Studies
Volume73
DOIs
Publication statusPublished - 2006

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