Wage dispersion is generated in a sequential search environment through heterogeneity in firm productivity along with an individual wage-effort trade-off. For a given degree of TFP dispersion, the framework can generate any amount of wage dispersion. Calibrated to generate realistic gains from...

This paper studies the endogenous determination of the price formation procedure in markets characterized by match-specific heterogeneity. We study a model of a market in which, in each time period, agents on one side (e.g., sellers) choose whether or not to post a price before they encounter...

This article shows how allowing for goods to be divisible at the point of consumption and incorporating productive heterogeneity lead to the emergence of middlemen in an equilibrium search environment. In the baseline model, middlemen are welfare reducing and their number increases as market...

This paper examines the role of commitment and advertising in the labor market for the determination of the levels of wages, human capital and physical capital. In a competitive search framework it is shown that when the characteristics of jobs or workers become common knowledge (so that the...

In a random search environment with two racial groups each composed of identical numbers of high and low productivity workers, firms use an imperfect screening device (interviews) to control hiring. If inconclusive interviews lead firms to hire majority workers but not minority workers, then the...

This paper explores how interviews affect the matching process when worker productivity is private information. Wages are determined by a single round of strategic bargaining after the worker is interviewed. The implications of this hiring process for the efficiency of matching and the incidence...