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How wage announcements affect job search behavior: an experimental investigation

How wage announcements affect job search behavior: an experimental investigation

by Michele Belot, Philipp Kircher and Paul Muller

Abstract

In this study we introduce a small number of “artificial” vacancies with randomised wages in an otherwise standard job search platform. We study how job seekers respond to wage announcements, and test the main implications of directed search: high wages should attract more applicants, but some applicants apply only to low wages even if higher wage offers are present. Both parts of the theory find support among the randomised job offers, suggesting an allocative role for wage competition in search markets. We calibrate a directed search model with multiple applications and on-the-job search and find that it can reproduce our findings quantitatively.

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