When heterogeneous employers can send cheap-talk messages about the quality of candidates they would like, this improves sorting, increases wages at high firms and lowers them at low firms, and improves efficiency. In a field experiment we indeed see significant changes in labor allocations and wages in these directions.
CHEAP TALK MESSAGES FOR MARKET DESIGN: THEORY AND EVIDENCE FROM A LABOR MARKET WITH DIRECTED SEARCH
with John Horton and Ramesh Johari (2021, new version coming soon)
When heterogeneous employers can send cheap-talk messages about the quality of candidates they would like, this improves sorting, increases wages at high firms and lowers them at low firms, and improves efficiency. In a field experiment we indeed see significant changes in labor allocations and wages in these directions.
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Working Papers
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