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Efficiency of Simultaneous Search

This paper presents an equilibrium labor search model in which workers can simultaneously apply to multiple firms to increase their search intensity. They observe firms' wage postings before choosing where to apply. Owing to coordination frictions, a firm may not receive any applications; otherwise it is able to hire unless all its applicants have better offers. It is shown that the equilibrium converges to the efficient Walrasian outcome as application costs vanish. Even for nonnegligible application costs, the entry of firms, the search intensity, and the number of filled vacancies are constrained efficient. Wage dispersion is essential for constrained efficiency. (c) 2009 by The University of Chicago. All rights reserved..

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Article provided by University of Chicago Press in its journal Journal of Political Economy.

Volume (Year): 117 (2009)
Issue (Month): 5 (October)
Pages: 861-913

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Handle: RePEc:ucp:jpolec:v:117:y:2009:i:5:p:861-913
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