Inefficient Hiring in Entry-Level Labor Markets

Amanda Pallais

No 18917, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Hiring inexperienced workers generates information about their abilities. If this information is public, workers obtain its benefits. If workers cannot compensate firms for hiring them, firms will hire too few inexperienced workers. I determine the effects of hiring workers and revealing more information about their abilities through a field experiment in an online marketplace. I hired 952 randomly-selected workers, giving them either detailed or coarse public evaluations. Both hiring workers and providing more detailed evaluations substantially improved workers' subsequent employment outcomes. Under plausible assumptions, the experiment's market-level benefits exceeded its cost, suggesting that some experimental workers had been inefficiently unemployed.

JEL-codes: J01 J20 J60 (search for similar items in EconPapers)
Date: 2013-03
New Economics Papers: this item is included in nep-cta, nep-exp and nep-lab
Note: LS
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Citations: View citations in EconPapers (7)

Published as Pallais, Amanda. 2014. "Inefficient Hiring in Entry-Level Labor Markets." American Economic Review, 104(11): 3565-99.

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