Equilibrium Directed Search with Multiple Applications

We analyse a model of equilibrium directed search in a large labour market. Each worker, observing the wages posted at all vacancies, makes a fixed, finite number of applications, "a". We allow for the possibility of "ex post" competition should more than one vacancy want to hire the same worker. For each "a", there is a unique symmetric equilibrium in which all vacancies post the same wage. When "a"= 1, the common posted wage lies between the competitive and monopsony levels, and equilibrium is efficient. When "a" > 1, all vacancies post the monopsony wage. Some workers fail to find a job, some find a job at the monopsony wage, and some-those for whom there is competition-get the competitive wage. Equilibrium is inefficient when "a" > 1; in particular, there is excessive vacancy creation. Copyright 2006 The Review of Economic Studies Limited.