Partially directed search in the labor market

Liangjie Wu

Journal of Economic Theory, 2024, vol. 220, issue C

Abstract: I study the labor market implications of an equilibrium search model with flexible degrees of information availability, which nests the random and directed search models as special cases. Workers have limited information about the payoffs of applying to different firms. Firms use wages to attract workers and mediate externalities among applicants. Limited information interacts with the allocative role of wages, leading to new predictions. Reducing information friction has non-monotonic impacts on efficiency. When the cost of acquiring information is low (high), alleviating the information friction reduces (exacerbates) the distortion in the market equilibrium. I then apply this model to discuss the implications of improvements in information technology and the spillover effects among workers in the labor market.

Keywords: Competitive search; Labor market; Monopsony (search for similar items in EconPapers)
JEL-codes: C78 J31 J60 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:220:y:2024:i:c:s0022053124000644

DOI: 10.1016/j.jet.2024.105858

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