Essays on Labor Markets with Search and Information Frictions

This dissertation attempts to analyze the wage determination and matching probability in labor markets with search and information frictions. In the first chapter, I provide a theoretical framework to analyze the role of job-to-job transition in a worker\u27s lifetime wage growth. I use the first-price auction models to analyze the wage determination and job-to-job transition process, and formulate the inference problem about a worker\u27s quality revealed through the worker\u27s past job history. By doing so, I characterize the mechanism through which frequent job transitions convey a negative signal about the worker\u27s quality. The second chapter, joint work with Hanna Wang, focuses on the market for entry-level jobs where job seekers send out costly applications in order to match with a potential employer. With the presence of coordination friction, we characterize the matching probability in a market with heterogeneous workers and show how restricting the search effort can improve social welfare. The third chapter reviews the literature on search and information frictions and identifies the contribution of the two earlier papers