Applications and Interviews: Firms’ Recruiting Decisions in a Frictional Labour Market

Ronald Wolthoff

The Review of Economic Studies, 2018, vol. 85, issue 2, 1314-1351

Abstract: I develop a directed search model to study the recruitment decisions of firms competing for workers who ex post differ in two dimensions: (1) their match productivity and (2) their probability of accepting a job offer, endogenously determined by their choice of application portfolio. To attract these workers, firms post a recruiting intensity and a hiring standard, in addition to terms of trade. A higher recruiting intensity is costly, but allows the firm to select more applicants for an interview, which reveals their productivity. The hiring standard solves the tradeoff between immediate hiring and waiting for a potentially better match in the future. I characterize equilibrium and find that various outcomes, including uniqueness of equilibrium and the cyclicality of recruiting intensity, crucially depend on firms’ recruiting cost and workers’ search cost. Calibration of the model to the U.S. labour market indicates a continuum of equilibria. Given selection of a particular equilibrium, hiring standards are countercyclical while recruiting intensity is procyclical. The calibrated model creates more amplification than a standard model without intensive margins and gives rise to procyclical match efficiency when viewed through the lens of a Cobb–Douglas matching function.

Keywords: Job search; Recruiting behaviour; Business cycles; Unemployment; Vacancies; Multiple applications; Directed search (search for similar items in EconPapers)
Date: 2018
References: Add references at CitEc
Citations: View citations in EconPapers (11)

Downloads: (external link)
http://hdl.handle.net/10.1093/restud/rdx045 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Applications and Interviews: Firms' Recruiting Decisions in a Frictional Labor Market (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:restud:v:85:y:2018:i:2:p:1314-1351.

Access Statistics for this article

The Review of Economic Studies is currently edited by Thomas Chaney, Xavier d’Haultfoeuille, Andrea Galeotti, Bård Harstad, Nir Jaimovich, Katrine Loken, Elias Papaioannou, Vincent Sterk and Noam Yuchtman

More articles in The Review of Economic Studies from Review of Economic Studies Ltd
Bibliographic data for series maintained by Oxford University Press ().