Abstract

In this study we introduce asmall number of "artificial" vacancies with randomised wages in anotherwise standard job search platform. We study how job seekers respond towage announcements, and test the main implications of directed search: highwages should attract more applicants, but some applicants apply only to lowwages even if higher wage offers are present. Both parts of the theory findsupport among the randomised job offers, suggesting an allocative role for wagecompetition in search markets. We calibrate a directed search model withmultiple applications and on-the-job search and find that it can reproduce ourfindings quantitatively.