The labor market effects of employer recruitment choice

Abstract

Abstract[Excerpt] I analyze employer recruitment decisions using a dynamic, discrete-choice structural model that I estimate on a sample of clerical workers from the MCSUI, a large cross section of establishments in 4 metropolitan areas of the U.S. In the model, employers choose either informal recruitment methods (which generate a small but select applicant pool from which the employer can hire quickly) or formal methods (which create a large but less select applicant pool which the employer must screen intensively, delaying hiring times). I study the effects of 3 counterfactual simulations on recruitment strategies, starting wages, and vacancy durations: a wage subsidy, a policy designed to improve information about prospective matches, and an increase in the heterogeneity of prospective matches. I show that the effects of exogenous policy or environmental changes can be decomposed into "pure wage effects" that affect the wage offers employers post, holding constant their recruitment strategies, and "recruitment-wage effects" that involve changes in recruitment methods. The results show that changes in recruitment strategies represent an important channel through which changes in the economic environment affect the starting wages and vacancy duration for new hires. Abstract I analyze employer recruitment decisions using a dynamic, discrete-choice structural model that I estimate on a sample of clerical workers from the MCSUI, a large cross section of establishments in 4 metropolitan areas of the U.S. In the model, employers choose either informal recruitment methods (which generate a small but select applicant pool from which the employer can hire quickly) or formal methods (which create a large but less select applicant pool which the employer must screen intensively, delaying hiring times). I study the effects of 3 counterfactual simulations on recruitment strategies, starting wages, and vacancy durations: a wage subsidy, a policy designed to improve information about prospective matches, and an increase in the heterogeneity of prospective matches. I show that the effects of exogenous policy or environmental changes can be decomposed into "pure wage effects" that affect the wage offers employers post, holding constant their recruitment strategies, and "recruitment-wage effects" that involve changes in recruitment methods. The results show that changes in recruitment strategies represent an important channel through which changes in the economic environment affect the starting wages and vacancy duration for new hires.JEL Classification: M51

Do Recruiters 'Like' it? Online Social Networks and Privacy In Hiring: A Pseudo-Randomized Experiment

“…Since the work of Rees (1966) and Granovetter (1995), many studies highlight the importance of referrals and recommendations in hiring. More recent studies using newly available data (DeVaro, 2008) show that informal channels of information matter as they carry reliable information that could only with di¢ culty spread through formal channels.…”

“…The period from March, 2012 to December, 2012 allows us to establish our main result: a Facebook pro…le provides recruiters with a reliable source of information on applicants. 20 The second period from December, 2012 to March, 2013 provides some evidence about the depth of the screening performed by recruiters within the online pro…les. We discuss the results of these consecutive parts of the experiment below.…”

“…Employers' search strategies The literature on the employers'search strategies during hiring is more recent and rather scarce (Granovetter, 1995;DeVaro, 2008;Oyer and Schae¤er, 2011). 7 According to this literature, employers can choose between extensive search, i.e.…”

“…During interview, if required for the position advertised, the employer may have the opportunity to carry out additional checks such as medical examination, credit worthiness, police record, etc. (Rees, 1966;Spence, 1973;Holzer, 1987;DeVaro, 2008).…”

“…As a consequence, both players implement search and signaling strategies to …nd the best match (Rees, 1966;Salop, 1973aSalop, , 1973bSpence, 1973;Holzer, 1987). Although there is a large literature on applicants'search and signaling strategies (Mortensen and Pissarides, 1999a), work on the similar strategies of employers is scarcer (Granovetter, 1995;DeVaro, 2008;Oyer and Schae¤er, 2011). Employers play a central role in the functioning of the labor market and the job matching process since applicants accept almost all job o¤ers (Barron et al, 1997).…”