We develop an equilibrium directed search model of the labor market where workers can simultaneously apply for multiple jobs. Our main theoretical contribution is to integrate the portfolio choice problem faced by workers into an equilibrium framework. All equilibria of our model exhibit wage dispersion. Consistent with stylized facts, the density of wages is decreasing and higher wage firms receive more applications per vacancy. Unlike most models of directed search, the equilibria are not constrained efficient.
Directed Search with Multiple Job Applications
Journal of Economic Theory, 2009, 114(2), pp. 445-471. With Manolis Galenianos.
We study wage dispersion and (in)efficiency in directed search when workers can strategically apply for multiple jobs but firms can only make one offer.
Journal of Monetary Economics, 2008, Vol. 55, pp. 1054-1066. With M. Galenianos. We characterize price dispersion and welfare in a monetary model with private information: inflation is regressive even though the rich hold more money. 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
American Economic Review, 2015, Vol 105 (10), 3030-3060. With Leo Kaas. We propose a tractable competitive search model with heterogeneous multi-worker firms, and investigate firm growth and business cycles. Go to paper
B.E. Journals of Theoretical Economics, 2013, Vol 13 (1). With S. Ludwig and A. Sandroni. We document a revealed preference for randomization for “social goods”, while such non-standard behavior is not present for private consumption goods. 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
Economic Journal, 2021 131: 713-744. With Ericson, Spinnewijn &, Starc Demand for insurance can be driven by high risk aversion or high risk, and we show how to separate the two using observed market shares. Go to paper
Quarterly Journal of Economics, 2008/123(2), pp. 621-661. With A. Postlewaite. [technical appendix] In a model of social learning, the better informed (wealthier) consumers get preferential service because their consumption signals high quality to others. Go to paper