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How Wage Announcements Affect Job Search Behaviour - A Field Experimental Investigation

Author

Listed:
  • Philipp Kircher

    (European University Institute and University of Edinburgh)

  • Paul Muller

    (Gothenburg University)

  • Michele Belot

    (University of Edinburgh)

Abstract

In this study we introduce a small number of artificial vacancies with randomised characteristics in an otherwise standard job search platform. This allows us to study how job seekers react to job characteristics - in analogy of usual randomised audit studies of employers' reactions to applicant characteristics. We focus on the reaction to wage announcements, and test the main implications of directed search: high wages should attract more and better applicants, but some applicants apply only to low wages even if higher wage offers are present. Both parts of the theory and support among the randomised job offers, suggesting an allocative role for wage competition in search markets. We calibrate a directed search model with multiple applications and on-the-job search and and that it can reproduce our findings quantitatively.

Suggested Citation

  • Philipp Kircher & Paul Muller & Michele Belot, 2017. "How Wage Announcements Affect Job Search Behaviour - A Field Experimental Investigation," 2017 Meeting Papers 722, Society for Economic Dynamics.
  • Handle: RePEc:red:sed017:722
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    References listed on IDEAS

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    1. Gomes, Pedro, 2012. "Labour market flows: Facts from the United Kingdom," Labour Economics, Elsevier, vol. 19(2), pages 165-175.
    2. Ernesto Dal Bó & Frederico Finan & Martín A. Rossi, 2013. "Strengthening State Capabilities: The Role of Financial Incentives in the Call to Public Service," The Quarterly Journal of Economics, Oxford University Press, vol. 128(3), pages 1169-1218.
    3. Marinescu, Ioana, 2017. "The general equilibrium impacts of unemployment insurance: Evidence from a large online job board," Journal of Public Economics, Elsevier, vol. 150(C), pages 14-29.
    4. Belot, Michèle & Kircher, Philipp & Muller, Paul, 2015. "Providing Advice to Job Seekers at Low Cost: An Experimental Study on On-Line Advice," CEPR Discussion Papers 10967, C.E.P.R. Discussion Papers.
    5. Galenianos, Manolis & Kircher, Philipp, 2009. "Directed search with multiple job applications," Journal of Economic Theory, Elsevier, vol. 144(2), pages 445-471, March.
    6. David Neumark & Roy J. Bank & Kyle D. Van Nort, 1996. "Sex Discrimination in Restaurant Hiring: An Audit Study," The Quarterly Journal of Economics, Oxford University Press, vol. 111(3), pages 915-941.
    7. Marinescu, Ioana E. & Wolthoff, Ronald P., 2015. "Opening the Black Box of the Matching Function: The Power of Words," IZA Discussion Papers 9071, Institute of Labor Economics (IZA).
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    9. Marianne Bertrand & Sendhil Mullainathan, 2004. "Are Emily and Greg More Employable Than Lakisha and Jamal? A Field Experiment on Labor Market Discrimination," American Economic Review, American Economic Association, vol. 94(4), pages 991-1013, September.
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    11. repec:aea:aejmac:v:10:y:2018:i:3:p:42-70 is not listed on IDEAS
    12. 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, pages 839-867, August.
    13. Philipp Kircher, 2009. "Efficiency of Simultaneous Search," Journal of Political Economy, University of Chicago Press, vol. 117(5), pages 861-913, October.
    14. Ioana Marinescu & Roland Rathelot, 2018. "Mismatch Unemployment and the Geography of Job Search," American Economic Journal: Macroeconomics, American Economic Association, vol. 10(3), pages 42-70, July.
    15. Acemoglu, Daron & Shimer, Robert, 1999. "Holdups and Efficiency with Search Frictions," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(4), pages 827-849, November.
    16. Burdett, Kenneth & Mortensen, Dale T, 1998. "Wage Differentials, Employer Size, and Unemployment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(2), pages 257-273, May.
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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.

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