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Directed search with heterogeneous firms: an experimental study

Author

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  • Andrew Kloosterman

Abstract

Directed search models labor markets where workers observe wages before deciding where they will apply. This paper tests this model for the case of heterogeneous firms in a laboratory experiment. The theory predicts that more productive firms offer higher wages and workers apply more often to these higher wages. In consequence, more productive firms are more likely to match and the market is more efficient than the prediction of an alternative model where search is random. The main results of the experiment are that average firms offer wages that are close to or a little lower than the theoretical predictions but highly variable and workers apply more often to high offers but not to the extent predicted. The markets are no more efficient than random search predicts, because of the variation in wage offers. Copyright Economic Science Association 2016

Suggested Citation

  • Andrew Kloosterman, 2016. "Directed search with heterogeneous firms: an experimental study," Experimental Economics, Springer;Economic Science Association, vol. 19(1), pages 51-66, March.
    • Handle: RePEc:kap:expeco:v:19:y:2016:i:1:p:51-66
    DOI: 10.1007/s10683-014-9426-8
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    Citations

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    Cited by:

    1. Randall Wright & Philipp Kircher & Benoit Julîen & Veronica Guerrieri, 2017. "Directed Search: A Guided Tour," NBER Working Papers 23884, National Bureau of Economic Research, Inc.
    2. Nejat Anbarci & Nick Feltovich, 2018. "Pricing in Competitive Search Markets: The Roles of Price Information and Fairness Perceptions," Management Science, INFORMS, vol. 64(3), pages 1101-1120, March.
    3. Jeong, Dawoon & Sesmero, Juan Pablo & Reeling, Carson, 2023. "Experimental Evidence of Efficiency and Equity of Posted Price Markets for Irrigation Water," 2023 Annual Meeting, July 23-25, Washington D.C. 335840, Agricultural and Applied Economics Association.
    4. Kloosterman, Andrew & Paul, Stephen, 2018. "Ultimatum game bargaining in a partially directed search market," Journal of Economic Behavior & Organization, Elsevier, vol. 154(C), pages 60-74.

    More about this item

    Keywords

    Directed search; Experimental economics; Heterogeneous productivity; C92; J64;
    All these keywords.

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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