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Working Papers


Research Overview


Curriculum Vitae (short, long)


Job Search Study


Search and Matching Research Group (SaM)


SaM Course Material: 2013, 2009  



Philipp Kircher

European University Institute and

University of Edinburgh



E-Mail: philipp.kircher@eui.eu




Research Interests:

Allocation of Resources in Markets with Search Frictions; Theory; Labor



Research Agenda: My work focusses mainly on labor markets, in particular on the sorting of firms and workers and on the effects of competition for labor on market outcomes. I also have side-interests in social preferences and disease transmission. Below I provide an overview how my work fits together. My particular interest in labor market sorting is also explained here and in my inaugural lecture (from min 5.30 onward).



Publications with short description


(1) The Role of Marriage in Fighting HIV: A Quantitative Illustration for Malawi  with J. Greenwood, C. Santos and M. Tertilt., American Economic Review P&P, forthcoming.

Using a quantitative equilibrium model of disease HIV transmission calibrated to Malawi (see (15) below), the effects of policies that encourage long-term partnerships are explored and contrasted to models that omit behavioural change or equilibrium effects.

(2) Matching, Sorting, and the Distributional Impacts of International Trade  w. G. Grossman & E. Helpman, Journal of Political Economy, 2017, Vol 124(1), 224-264. (simulations, matlab)

We explore the consequences of trade when both capital and labor are heterogeneous and output depends not only on the capital-labor ratio but also on the matched types. Trade induces across-sector sorting and within sector re-matching between capital and labor types, affecting both across and within-sector wage inequality.

(3) Efficient Competition through Cheap Talk: The Case of Competing Auctions with K. Kim. Econometrica , 2015, Vol 83 (5), 1849-1875.                                      (online appendix)


We introduce cheap-talk instead of (reserve) price competition into a competing auctions framework where auctioneers have private information on the gains from trade. Under first price auctions, a truthful and efficient equilibrium exists, and replicates the outcome in standard competing auctions and competitive search models. Under second price auctions this is not the case.

(4) Efficient Firm Dynamics in a Frictional Labor Market  with Leo Kaas, American Economic Review, 2015, Vol 105 (10), 3030-3060.

We propose a heterogeneous large-firm model where firms compete for workers through wage contracts. Firms grow not only by posting more vacancies, but also by hiring more per vacancy, in line with recent evidence. In contrast to usual bargaining models the baseline economy is efficient and tractable over the business cycle, despite sluggishness in many aggregate variables.

(5) The U-Shapes of Occupational Mobility with Fane Groes and Iourii Manovskii, Review of Economic Studies, 2015, Vol 82 (2), 659-692.

We show for Danish administrative data that occupational mobility is U-shaped: both low and high wage earners within an occupation have a particularly large probability of leaving. The former tend to switch “up” and the latter switch “down”. Exceptions are “rising” occupation where the low earners tend to leave. The facts can be reconciled in theories of vertical sorting.






(10) Sorting and Decentralized Price Competition with Jan Eeckhout, Econometrica, 2010, Vol. 78(2), 539–574.

We analyze the impact of search frictions in the standard competitive assignment problem of Becker’s (1973). Assortative matching depends on a simple trade-off between complementarities in the match-value and complementarities in the search technology, measured by their elasticity of substitution. Root-supermodularity is needed to ensure sorting.

(11) Sorting vs Screening – Search Frictions and Competing Mechanisms with Jan Eeckhout, Journal of Economic Theory, 2010/145, 1354-1385.

The search technology is a crucial determinant in competing mechanisms settings where sellers want to induce buyers to search for them: When one assumes (as is often done in the search literature) that meetings of low types reduce the chances to meet with high types, then price posting and market separation arises. Otherwise, auctions in a joint market arise.

(12) Efficiency of Simultaneous Search Journal of Political Economy, 2009, Vol. 117(5), pp. 861- 913.

We analyze simultaneous search: After firms advertize their wages, workers apply simultaneously for many jobs, and then get hired in a stable assignment. For small search costs the outcome is Walrasian, otherwise wage dispersion is necessary for optimality. Existing one-application models can be justified as analyzing each wage segment separately.

(13) Directed Search with Multiple Job Applications with Manolis Galenianos, Journal of Economic Theory, 2009, 114(2), pp. 445-471.

We analyze a directed search setting where workers can strategically apply for multiple jobs. Firms can make only one offer. We characterize the wages, applications, and (in)efficiencies.

(14) A Model of Money with Multilateral Matching with Manolis Galenianos, Journal of Monetary Economics, 2008, Vol. 55, pp. 1054-1066.

We characterize price dispersion and welfare in a monetary model with private information, and show that inflation acts as a regressive tax despite the fact that richer people hold more money: inflation acts as a tax on producers and induces scarcity that limits especially the consumption of the poorer individuals.


(14) Strategic Firms and Endogenous Consumer Emulation with Andrew Postlewaite, Quarterly Journal of Economics, 2008/123(2), pp. 621-661.

(technical appendix)

In a model of social learning, the better informed (wealthier) consumers get preferential service from firms because their consumption signals high firm-quality to other consumers.


Working Papers



 (15) An Equilibrium Model of the African HIV/AIDS Epidemic  Mar 2013 (first draft 12/09)  with J. Greenwood, C. Santos and M. Tertilt. R&R Econometrica.

An equilibrium search model of the Malawian HIV/AIDS epidemic is developed. Different sexual activities vary in their riskiness. When choosing a sexual activity, such as short-term sex without a condom, a person rationally considers its risk. A simulated version of the model is parameterized and used to think through possible countervailing effects of policies.

 (16) Assortative Matching with Large Firms  May 2016 (first draft Feb 2012)  with Jan Eeckhout. R&R Econometrica.

We consider a matching model where firms can hire better and/or more workers. Sorting is driven by complementarities between firm and worker types, as well as between firm type and the number of workers. The conditions remain simple and tractable, and we apply them to study the effects of skill- and quantity-biased technical change.

 (17) Inferring Risk Perceptions and Preferences using Choice from Insurance Menus: Theory and Evidence  June 2016 with Keith Ericson, Johannes Spinnewijn, Amanda Starc

Demand for insurance can be driven by high risk aversion or high risk. We show how to separately the two using only choices from menus of insurance plans (either through different cross-sections facing different options, or from single choices out of a diverse menue). We prove identification in the textbook model, and illustrate it with health insurance choice.

 (18) Providing Advice to Job Seekers at Low Cost: An Experimental Study on On-Line Advice  June 2016 (first Nov ‘15) w. Michèle Belot and Paul Muller. R&R REStud.    (online appendix)

We develop and evaluate experimentally a novel tool that redesigns the job search process by providing tailored advice at low cost on the internet. Job sekers who see relevant alternative occupations and associated jobs broaden the set of jobs they consider and increase their job interviews. Effects are strongest for narrow searcher and the longer unemployed.


 Research Overview (click for publication list):

Most of my work has been concerned with two main questions. 1. How to combine search frictions (which are a sign that markets do not immediately clear) with a notion of competition for labor (which underlies most classical theory of labor); and 2. how heterogeneous firms match with heterogeneous workers. My approach has been and is still mostly theoretical, but some of my newer contributions use calibrated and estimated data, and look at model identification. The individual publications are listed below, and the actual publication include the important credit to my co-authors and to all the prior work.

Directed and Competitive Search: This literature attempts to combine search and competition in a market game where one side - e.g., firms or stores - first publicly post the terms of trade, and then agents from the other side - e.g., workers or consumers - observe the postings and decide where to go in order to trade. Only at this stage, after wages and visiting decisions have been made, the search frictions arise. For a general treatment of the usual micro-foundation, see (7).

One important consideration is the efficiency of the labor market. For example, should job creation be subsided on efficiency grounds? It is trivial to improve efficiency by eliminating the search frictions. Since this seems infeasible, the literature has focused on efficiency in a constrained sense that assumes that the search frictions cannot be avoided. Even constrained efficiency typically fails under random search because the wages are determined once the worker and firms are “locked into each other” and there is not direct competition from other firms. In directed search, firms compete with other firms in order to get workers to apply for their jobs. Also known as competitive search, this induces constrained efficiency not only along the well-explored dimension of firm entry, but also along the expansion and contraction of existing firms (even under decreasing returns to scale, see (4)). It still captures many stylized facts about firm dynamics and hiring in a tractable manner.

With heterogeneous workers efficiency carries over, but only if firms can post sufficiently complicated contracts. If workers differ in their utility of leisure, a simple wage suffices only if the presence of one worker prevents other workers from meeting the same firm (see (11)). Whether this is the case is important, as it determines whether the presence of low types affects the employment prospects of high types. If that is the case, firms do not want to attract several worker types at once, and better firms face an interesting problem: For the same amount of money they can attract few talented workers or many untalented workers. They do the former only if the complementarities in output outweigh the elasticity in terms of their matching probability (see (10)). A general characterization of the trade-off between more workers or better workers in a many-to-one matching environment is developed in work in progress (16). In such a setting changes to the national economy such as opening to international trade drive productive firms not only to expand employment but also to change the skill of their employees, affecting both measured productivity and within and across sector wage dispersion (see (2)).

When the market does not reach efficiency despite posting the terms of trade in a competitive search manner, there are two main reasons for this. The first reason is a missing market. This can be subtle in a search model: For example, when workers can apply for jobs at many firms, a “market” is missing if firms cannot trade the probability that workers apply to other firms (see (13)). Rather than creating more markets or more complicated contracts, efficiency is also restored if firms communicate with all their applicants after they received their applications (in the tradition of stable matchings, see (12)). The second reason is market power where few firms dominate the hiring market. Here unemployment benefits restore efficiency by improving employment at productive firms but decreasing employment overall, contrary to minimum wage effects (see (9)).

Partially directed search: Often workers (consumers) can only see some information, but cannot see exactly the terms of trade or the attractiveness of the firms. Efficient allocations can still be sustained even if workers observe only cheap-talk messages from the firms (3). Alternatively, consumers may only see where some other consumers purchased, in which case firms have an incentive to reward more informed (richer) consumers because they are a credible way of attracting additional customers to the firm (see (14)). Or workers might know about some random jobs before a costly search process that matches them competitively, which provides a tractable framework to discuss problems in identification of the sorting between workers and firms and in particular problems with current fixed effects estimation strategies (see (8)).

Re-sorting when worker ability changes: In (5) we find patterns that suggest that workers sort themselves into the occupations that are most suitable to their skills. Occupational mobility arises when workers ability changes, for example because they and their employer learn that the worker is better or worse than expected. This theory seems to be in account with the fact that both high-paid and low-paid workers are most likely to leave their occupations, with the former tending to change to better occupations while the latter tends to change to worse occupations. In (18) we advice a randomly chosen subset of job seekers about the occupational transitions by other individuals. We provide such advice at low cost on a self-designed online search platform, and track both the search activities on our site as well as outside. Such advice seems to induce people to consider a wider range of occupations and to lead to more job interviews. As of now, it seems the first study that redesigns the online search environment for unemployed job seekers.


Other work: (15) models the transmission of HIV/AIDS in an equilibrium context and discusses which kind of changes in partner choice and sexual behavior might offset medical interventions that reduce transmission risk. (1) uses the same setup to consider social interventions that promote long-term relationsshipos. (17) asks whether one can separately identify risk preferences and risk perceptions in insurance contexts. Finally, (6) shows experimentally that people’s choices violate the independence axiom in social settings even though we do not observe this for non-social settings, which might be important in many situations such as voting over redistribution.


(last updated: 2015)