Philipp Kircher (University of Edinburgh and European University Institute)

joint with Michele Belot, Philipp Kircher, Paul Muller

We study how job seekers respond to wage announcements by assigning wages randomly to pairs of otherwise similar vacancies in a large number of professions. High wage vacancies attract  more interest, in contrast with much of the evidence based on observational data. Some applicants  only show interest in the low wage vacancy even when they were exposed to both. Both findings  are core predictions of theories of directed/competitive search where workers trade off the wage  with the perceived competition for the job. A calibrated model with multiple applications and  on-the-job search induces magnitudes broadly in line with the empirical findings.

VIEW PAPER