Abstract
We consider a model where firms open vacancies and post and commit to a wage mechanism. Search is costly and workers simultaneously apply to multiple jobs. Firms can be connected to multiple workers and workers to multiple firms. We use a new method to derive the expected maximum number of matches in a large market as a function of the number of applications and market tightness. We also derive the conditions under which firm entry, worker participation, and search intensity are socially efficient. Finally, we show that a sequential auction under incomplete information can establish the social optimum and discuss some alternative mechanisms that can, under complete information of the entire network, also deliver social efficiency.
| Original language | English |
|---|---|
| Pages (from-to) | 245-282 |
| Number of pages | 38 |
| Journal | American Economic Journal: Microeconomics |
| Volume | 9 |
| Issue number | 3 |
| DOIs | |
| Publication status | Published - Aug 2017 |
Funding
The authors gratefully acknowledge the hospitality of CESifo and Christian Holzner acknowledges the financial support by the German Research Foundation, grant Ho 4537/1-1. The authors thank Xiaoming Cai, Philipp Kircher, Mihai Manea, Ren van den Brink, and seminar participants at Cambridge, CESifo, CREST, the University of Edinburgh, the University of Essex, the University of Konstanz, the University of Mainz, NBER, the Norwegian School of Management, University of Helsinki the 2011 Tinbergen conference, the University of Amsterdam, and the Vrije Universiteit Amsterdam.
| Funders | Funder number |
|---|---|
| Norwegian School of Management, University of Helsinki | |
| University of Mainz | |
| National Bureau of Economic Research | |
| Economic and Social Research Council | ES/L009633/1 |
| University of Edinburgh | |
| Deutsche Forschungsgemeinschaft | Ho 4537/1-1 |
| Universiteit van Amsterdam | |
| Core Research for Evolutional Science and Technology | |
| Universität Konstanz |
