How wage announcements affect job search behavior: an experimental investigation
by Michele Belot, Philipp Kircher and Paul Muller
Forthcoming in American Economic Journal – Macroeconomics, 2022
Abstract
In a field experiment, we study how job seekers respond to posted wages by assigning wages randomly to pairs of otherwise similar vacancies in a large number of professions. Higher wages attract significantly more interest. Still, a non-trivial number of applicants only reveal an interest in the low wage vacancy. With a complementary survey, we show that external raters perceive higher wage jobs as more competitive. These findings qualitatively support core predictions of theories of directed/competitive search, though in the simplest calibrated model, applications react too strongly to the wage. We discuss extensions such as on-the-job search that rectify this.
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