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    Directed search, rationing and wage dispersion

    Hori, K. (2009) Directed search, rationing and wage dispersion. B.E. Journal of Theoretical Economics 9 (1), ISSN 1935-1704.

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    Abstract

    This paper develops a microeconomic model of directed search, where firms are heterogeneous in the number of vacancies advertised, and wages affect workers' choices when both applying for jobs and accepting a job. An aggregate matching function is derived, which incorporates workers' preferences for firms. The aggregate level of matches is shown to be independent of the workers' preferences in the job acceptance stage. When firms' labor demands are heterogeneous, the matching market equilibrium outcome is suboptimal. Matching efficiency is, however, attained in equilibrium, when wages are employed as a rationing device. This results in wage dispersion, despite workers being homogeneous.

    Metadata

    Item Type: Article
    Keyword(s) / Subject(s): Directed search, matching function, wage dispersion
    School: Birkbeck Schools and Departments > School of Business, Economics & Informatics > Economics, Mathematics and Statistics
    Depositing User: Administrator
    Date Deposited: 18 Nov 2010 12:58
    Last Modified: 17 Apr 2013 12:33
    URI: http://eprints.bbk.ac.uk/id/eprint/1955

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