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Equilibrium Directed Search with Multiple Applications

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  • James Albrecht
  • Pieter A. Gautier
  • Susan Vroman

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. Copyright 2006, Wiley-Blackwell.

Suggested Citation

  • James Albrecht & Pieter A. Gautier & Susan Vroman, 2006. "Equilibrium Directed Search with Multiple Applications," Review of Economic Studies, Oxford University Press, vol. 73(4), pages 869-891.
  • Handle: RePEc:oup:restud:v:73:y:2006:i:4:p:869-891
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    File URL: http://hdl.handle.net/10.1111/j.1467-937X.2006.00400.x
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts

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