Abstract

In this study we introduce a small number of “artificial” vacancies with randomised characteristics in an otherwise standard job search platform. This allows us to study how job seekers react to job characteristics - in analogy of usual randomised audit studies of employers’ reactions to applicant characteristics. We focus on the reaction to wage announcements, and test the main implications of directed search: high wages should attract more and better applicants, but some applicants apply only to low wages even if higher wage offers are present. Both parts of the theory find support among the randomised job offers, suggesting an allocative role for wage competition in search markets. We calibrate a directed search model with multiple applications and on-the-job search and find that it can reproduce our findings quantitatively.