Choosy search and the mismatch of talents

Abstract: This paper proposes a multi-sector matching model where workers have (sym-metric) sector-specific skills and the search market is segmented by sector. Workers choose the range of markets they are willing to participate in. I identify a com-position externality: workers do not take into account the impact of their choice on sector-specific mean productivity among the pools of job-seekers. Consequently, workers prospect too many market segments, and there is room for public policy even when the so-called Hosios condition holds