Efficiency of Simultaneous Search

Philipp Kircher

Research output: Contribution to journalArticlepeer-review

Abstract

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.

Original languageEnglish
Pages (from-to)861-913
Number of pages53
JournalJournal of Political Economy
Volume117
Issue number5
DOIs
Publication statusPublished - Oct 2009

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