We explore the impact of wage offers on job applications, testing implications of the directed search model and trying to distinguish it from random search. We use a field experiment conducted on a Chinese job board, with real jobs for which we randomly varied the wage offers across three ranges. We find that higher wage offers raise application rates overall, which is consistent with directed search but can also arise with random search. We also find that higher wage offers raise application rates for job seekers with wage offers above reservation wages, and that – among the latter – the increase in application rates is stronger for those with higher reservation wages. The latter two types of evidence are consistent with directed search but not random search. Hence, our evidence lends support to directed search models.
Authors
- Acknowledgements & Disclosure
- We owe a huge thanks to the job board on which we ran our experiment. We are grateful for helpful comments from Xiaoming Cai, Chao He, Daniel Houser, Binglin Gong, Zhiyun Li, David Ong, Xiangquan Zeng, participants at 2020 ESA Global Online Conference, 2020 Beijing Normal University Conference on Experimental Economics, 2020 International Symposium on Labor Economics, and seminar participants at Harbin Institute of Technology at Shenzhen, Jinan University, Peking University, Shandong University, Wuhan University, and Xiamen University. We thank Shiwen Chen, Yiqiang Guo, Wanyu Jiang, Kelin Lu, Yue Yin, Zhuo Zhang, and especially Shuqing Luo, for research assistance. Financial support from the National Natural Science Foundation of China (Project Nos. 71503255 & 71973016), the Beijing National Natural Science Foundation (Project No. 9192013), and MOE (Ministry of Education in China) Project of Humanities and Social Sciences (Project No. 18YJA790032) is gratefully acknowledged. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
- DOI
- https://doi.org/10.3386/w28660
- Published in
- United States of America
