Who Gets Hired? The Importance of Competition among Applicants

Edward Lazear, Kathryn L. Shaw and Christopher T. Stanton

Journal of Labor Economics, 2018, vol. 36, issue S1, S133 - S181

Abstract: Being hired into a job depends not only on one’s own skill but also on that of other applicants. When another able applicant applies, a well-suited worker may be forced into unemployment or into accepting an inferior job. A model of this process defines over- and underqualification and provides predictions on its prevalence and on the wages of mismatched workers. It also implies that unemployment is concentrated among the least skilled workers, while vacancies are concentrated among high-skilled jobs. Four data sets are used to confirm the implications and establish that the hiring probability is low when competing applicants are able.

Date: 2018
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Chapter: Who Gets Hired? The Importance of Competition among Applicants (2015)
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