This essay surveys the literature on directed search and competitive search equilibrium, covering theory and a variety of applications. These models share features with traditional search theory, but also differ in important ways. They share features with general equilibrium theory, but with explicit frictions. Equilibria are often efficient, mainly because markets price goods plus the time required to get them. The approach is tractable and arguably realistic. Results are presented for finite and continuum economies. Private information and sorting with heterogeneity are analyzed. While emphasizing issues and applications, we also provide several hard-to-find technical results.
Directed and Competitive Search: A Guided Tour
Journal of Economic Literature, 2021 59(1): 90-148. With R. Wright,B. Julien, and V. Guerrieri.
This survey presents a comprehensive overview of the directed/competitive search literature.
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Publications
Review of Economic Studies, 2015, Vol 82 (2), 659-692. With Fane Groes and Iourii Manovskii. Occupational mobility is highest for high and low earners, and the former move “up” and the latter “down” as in models of vertical re-sorting. Go to paper
American Economic Journal - Macroeconomics, forthcoming 2022, with Michèle Belot and Paul Muller. In a field experiment, we study how job seekers respond to posted wages by assigning wages randomly to pairs of otherwise similar vacancies in a large number of professions. Higher wages attract significantly more interest, but still a non-trivial number of applicants only reveal an interest in the low wage vacancy - qualitatively in line with a directed search model with multiple applications and on-the-job search. Go to paper
Journal of Political Economy, 2017, 124(1), 224-264. With G. Grossman & E. Helpman. (simulations, matlab). We introduce two-sided heterogeneity into a Hecksher-Ohlin-style trade model to study factor reallocation and wage inequality within and across sectors. Go to paper
Publications
Econometrica. 2018 86(1): 85-132. With Jan Eeckhout. When heterogeneous firms can choose both how many and which workers to hire, we illustrate consequences for firm-size and wage inequality. Note a correction for the condition with capital: corrigendum. Go to paper
International Economic Review, 2012, Vol 53 (1), 1-21. With M. Galenianos. We study a finite directed-search wage posting game among heterogeneous firms (allowing for risk aversion, moral hazard,…), including limit theorems. Go to paper
Econometrica, 2019 87(4): 1081-1113. With J. Greenwood, C. Santos and M. Tertilt A calibrated equilibrium search model of an HIV/AIDS epidemic is developed to analyze the direct impact and the behavioral adjustment to policies. Go to paper
Journal of Economic Theory, 2010/145, 1354-1385. With Jan Eeckhout. Search affects competing mechanisms: if meetings with low types reduce those of high types, price posting and market separation replace auctions. Go to paper
Publications
Journal of Political Economy, 2009, Vol. 117(5), pp. 861- 913. In a directed search where workers apply for multiple jobs and are then allocated via a stable matching, efficiency arises at all stages. Go to paper