Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/85829 
Year of Publication: 
2003
Series/Report no.: 
Tinbergen Institute Discussion Paper No. 03-004/3
Publisher: 
Tinbergen Institute, Amsterdam and Rotterdam
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.
Subjects: 
directed search
matching
wage dispersion
efficiency.
JEL: 
J64
D83
J41
Document Type: 
Working Paper

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