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Directed Search with Multiple Job Applications

Author

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  • Manolis Galenianos

    (Department of Economics, University of Pennsylvania)

  • Philipp Kircher

    (Department of Economics, University of Bonn)

Abstract

We develop an equilibrium directed search model of the labor market where workers can simultaneously apply for multiple jobs. The main result is that all equilibria exhibit wage dispersion despite the fact that workers and firms are homogeneous. Wage dispersion is driven by the simultaneity of application choice. Risk-neutral workers apply for both ‘safe’ and ‘risky’ jobs. The former yield a high probability of a job offer, but for low pay, and act as a fallback option; the latter provide with higher potential payoff, but are harder to get. Furthermore, the density of posted wages is decreasing, consistent with stylized facts. Unlike most directed search models, the equilibria are not constrained efficient.

Suggested Citation

  • Manolis Galenianos & Philipp Kircher, 2005. "Directed Search with Multiple Job Applications," PIER Working Paper Archive 05-022, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
    • Handle: RePEc:pen:papers:05-022
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    References listed on IDEAS

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    More about this item

    Keywords

    Directed Search; Equilibrium Labor Search; Matching; Wage Dispersion; Portfolio Choice;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory

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