Does Online Search Crowd Out Traditional Search and Improve Matching Efficiency? Evidence from Craigslist

Kory Kroft and Devin Pope

CLSSRN working papers from Vancouver School of Economics

Abstract: Ever since the seminal work of Stigler (1962), economists have recognized that information in markets is costly to acquire and can lead to “search frictions†. The remarkable growth in online search has substantially lowered the cost of information acquisition. Despite this, there is little evidence concerning the extent to which this has altered the search process and raised overall matching efficiency. To address this issue, we analyze the expansion of the website "Craigslist", which allows users to post job ads and apartment and housing rental ads at virtually no cost. Exploiting the sharp geographic and temporal variation in the availability of online search, induced by Craigslist, we produce three key findings: Craigslist significantly lowered classified job advertisements in newspapers, caused a significant reduction in the apartment and housing rental vacancy rate, and had no effect on the unemployment rate.

Keywords: Internet; Craigslist; matching; unemployment; vacancies (search for similar items in EconPapers)
JEL-codes: J22 J23 J24 J64 O33 (search for similar items in EconPapers)
Pages: 48 pages
Date: 2012-11-30, Revised 2012-11-30
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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Journal Article: Does Online Search Crowd Out Traditional Search and Improve Matching Efficiency? Evidence from Craigslist (2014)
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