Abstract
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.
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