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 nontrivial 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.
Belot, Michèle, Philipp Kircher, and Paul Muller.
"How Wage Announcements Affect Job Search—A Field Experiment."
American Economic Journal: Macroeconomics,
Wage Level and Structure; Wage Differentials
Labor Turnover; Vacancies; Layoffs
Unemployment: Models, Duration, Incidence, and Job Search