Labor Market Tightness and Hiring Outcomes: Evidence from Job Application Data

Lennart Ziegler ()
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Lennart Ziegler: Central European University

No 18778, IZA Discussion Papers from IZA Network @ LISER

Abstract: This study examines how the supply of job applicants shapes hiring outcomes of firms. Using Austrian matched vacancy-worker data, my analysis exploits variation in the number of job applications, inferred from referrals made by the public employment service. To address endogeneity concerns, I instrument the number of applications with the inflow of jobseekers from mass layoffs. A larger supply of applicants shortens vacancy filling duration and raises the job tenure of hires, consistent with improved worker-firm match quality. At the same time, more applications lower starting wages, which indicates that the employer-bargaining channel dominates the match-quality channel. A larger applicant pool also reinforces worker segregation: firms with high shares of male (native) workers hire even fewer female (foreign) workers when applications are abundant. This reflects employer selection rather than a shift in the composition of the applicant pool, which responds little to the supply shock.

Keywords: labor market tightness; vacancies; recruitment; worker-firm match quality; wage setting; worker segregation (search for similar items in EconPapers)
JEL-codes: J23 J62 J63 J71 (search for similar items in EconPapers)
Date: 2026-07
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