published in: Review of Economic Studies, 2006, 73 (4), 869-891
We analyze a model of directed search in which unemployed job seekers observe all posted
wages. We allow for the possibility of multiple applications by workers and ex post
competition among vacancies. For any number of applications, there is a unique symmetric
equilibrium in which vacancies post a common wage. When workers apply to only one
vacancy, a single wage is paid and the resulting equilibrium is efficient. When workers make
multiple applications, there is dispersion in wages paid, and equilibrium may be inefficient.
We show that our results also hold in a steady-state version of the model.
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