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The costs of hiring skilled workers

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Author Info

  • Blatter, Marc
  • Muehlemann, Samuel
  • Schenker, Samuel

Abstract

This paper analyzes the structure of hiring costs for skilled workers. We use novel Swiss administrative firm-level survey data that provide direct and detailed measures of hiring costs, including recruitment and adaptation. Results show that average hiring costs range, depending on firm size, from 10 to 17weeks of wage payments. The structure of hiring costs is convex. Marginal hiring costs increase with the number of hires and reach up to 24weeks of wage payments. We find no evidence for a fixed cost component. Hiring costs also increase with the hiring rate (the ratio of hires and skilled workers), confirming convexity. Hiring costs generally increase with skill requirements for job applicants, and depend on macroeconomic conditions: a 1% point increase in the unemployment rate reduces average hiring costs by more than 5%.

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Bibliographic Info

Article provided by Elsevier in its journal European Economic Review.

Volume (Year): 56 (2012)
Issue (Month): 1 ()
Pages: 20-35

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Handle: RePEc:eee:eecrev:v:56:y:2012:i:1:p:20-35

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Web page: http://www.elsevier.com/locate/eer

Related research

Keywords: Hiring costs; Labor adjustment costs;

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Citations

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Cited by:
  1. Kjell Erik Lommerud & Odd Rune Straume & Steinar Vagstad, 2012. "Employment protection and unemployment benefits: On technology adoption and job creation in a matching model," NIPE Working Papers 3/2012, NIPE - Universidade do Minho.
  2. Christian Holzner & Mario Larch, 2011. "Capacity Constraining Labor Market Frictions in a Global Economy," CESifo Working Paper Series 3597, CESifo Group Munich.
  3. Stadin, Karolina, 2012. "Vacancy Matching and Labor Market Conditions," Working Paper Series 2012:16, Uppsala University, Department of Economics.
  4. Samuel Muehlemann & Harald Pfeifer, 2012. "The structure of hiring costs in Germany - evidence from firm-level data," Economics of Education Working Paper Series 0077, University of Zurich, Institute for Strategy and Business Economics (ISU), revised Sep 2013.
  5. Alan Manning, 2010. "Imperfect Competition in the Labour Market," CEP Discussion Papers dp0981, Centre for Economic Performance, LSE.
  6. Mühlemann, Samuel & Wolter, Stefan C. & Wüest, Adrian, 2009. "Apprenticeship Training and the Business Cycle," IZA Discussion Papers 4460, Institute for the Study of Labor (IZA).
  7. Silvio Sticher, 2013. "Selection upon Wage Posting," Diskussionsschriften dp1311, Universitaet Bern, Departement Volkswirtschaft.
  8. Hirokazu Mizobata, 2014. "Differing factor adjustment costs across industries: Evidence from Japan," KIER Working Papers 885, Kyoto University, Institute of Economic Research.
  9. Blatter, Marc & Mühlemann, Samuel & Schenker, Samuel & Wolter, Stefan C., 2012. "Hiring Costs of Skilled Workers and the Supply of Firm-Provided Training," IZA Discussion Papers 6344, Institute for the Study of Labor (IZA).
  10. Yokota, Koji, 2012. "Time Discount and Convex Hiring Cost," ビジネス創造センターディスカッション・ペーパー (Discussion papers of the Center for Business Creation) 10252/4850, Otaru University of Commerce.
  11. Samuel Muehlemann & Harald Pfeifer & Felix Wenzelmann, 2013. "The Costs of Recruiting Apprentices: Evidence from German Firm-Level Data," Economics of Education Working Paper Series 0095, University of Zurich, Institute for Strategy and Business Economics (ISU).

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