Advertising and Labor Market Matching : A Tour Through the Times

Surveying employment-related newspaper advertisements over several centuries, we identify four eras (neither workers nor firms posted ads, mostly workers posted, mostly firms posted, both parties posted). These eras correspond to alternative equilibria in a strategic coordination game describing advertising investments. Potential explanations for transitions across eras include increasing literacy rates, expansion of social insurance programs, growth in labor force size, reduction in mobility costs and search frictions, and the internet. A discontinuous welfare function has policy implications for job matching (e.g. policies to reduce search frictions can induce one side of the market to free ride on the other's investments)