BIROn - Birkbeck Institutional Research Online

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.


Download (421kB) | Preview
Official URL:


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.

Item Type: Article
Keyword(s) / Subject(s): Directed search, matching function, wage dispersion
School or Research Centre: Birkbeck Schools and Research Centres > 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

Archive Staff Only (login required)

Edit/View Item Edit/View Item