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Job Search With Bidder Memories

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  • Carlos Carrillo‐Tudela
  • Guido Menzio
  • Eric Smith

Abstract

This paper revisits the no-recall assumption in job search models with take-it-or-leave-it offers. Workers who can recall previously encountered potential employers, in order to engage them in Bertrand bidding, have a distinct advantage over workers without such attachments. Firms account for this difference when hiring a worker. When a worker first meets a firm, the firm offers the worker a sufficient share of the match rents to avoid a bidding war in the future. The pair share the gains to trade. In this case, the Diamond paradox no longer holds.
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Suggested Citation

  • Carlos Carrillo‐Tudela & Guido Menzio & Eric Smith, 2011. "Job Search With Bidder Memories," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 52(3), pages 639-655, August.
    • Handle: RePEc:ier:iecrev:v:52:y:2011:i:3:p:639-655
    DOI: j.1468-2354.2011.00643.x
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    References listed on IDEAS

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    7. Diamond, Peter A., 1971. "A model of price adjustment," Journal of Economic Theory, Elsevier, vol. 3(2), pages 156-168, June.
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    Citations

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    Cited by:

    1. Guido Menzio & Nicholas Trachter, 2014. "Large and Small Sellers: A Theory of Equilibrium Price Dispersion with Sequential Search," Working Paper 14-8, Federal Reserve Bank of Richmond.
    2. Ronald Wolthoff, 2014. "It'S About Time: Implications Of The Period Length In An Equilibrium Search Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 55(3), pages 839-867, August.
    3. Carlos Carrillo-Tudela & Eric Smith, 2017. "Search Capital," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 23, pages 191-211, January.
    4. Menzio, Guido & Trachter, Nicholas, 2015. "Equilibrium price dispersion with sequential search," Journal of Economic Theory, Elsevier, vol. 160(C), pages 188-215.
    5. Wolthoff, Ronald P., 2011. "It's About Time: Implications of the Period Length in an Equilibrium Job Search Model," IZA Discussion Papers 6002, Institute of Labor Economics (IZA).
    6. Poeschel, Friedrich, 2018. "Why do employers not pay less than advertised? Directed search and the Diamond paradox," MPRA Paper 87920, University Library of Munich, Germany.
    7. Yann Bramoullé & Brian W. Rogers & Erdem Yenerdag, 2022. "Matching with Recall," AMSE Working Papers 2203, Aix-Marseille School of Economics, France.

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    More about this item

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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