When vacancies are filled, the ads that were posted are often not withdrawn. Stale information about already filled vacancies implies that old ads are more likely to be obsolete than are younger ones. When ads for jobs stipulate the vacancy creation date, job-seekers apply for the different jobs so as to equalize matching odds across vacancy age. This search behavior leads them to over-apply for young ads. Thus filling a vacancy of a given age creates a negative informational externality that affects all cohorts of vacancies after this age. The magnitude of the externality decreases with the age of the filled vacancy. We calibrate the model using US labor market data. The contribution of phantom vacancies to overall frictions is large, although the magnitude of the externality is small.

Co-author:  Bruno Decreuse