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Costly interviews

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  • Josephson, Jens
  • Shapiro, Joel

Abstract

In this paper, we show how the interaction between costly screening and competition in decentralized markets may prevent efficient matching. We examine this phenomenon in a simple dynamic model of a professional labor market, where firms can pay a cost to interview applicants who have private information about their own ability. Inefficiencies arise when a firm decides not to interview potentially able candidates since it infers that sufficiently good candidates will be hired by more productive firms. This effect is robust to changes in the information structure of the market, but it can be mitigated by subsidizing screening costs.

Suggested Citation

  • Josephson, Jens & Shapiro, Joel, 2016. "Costly interviews," International Journal of Industrial Organization, Elsevier, vol. 45(C), pages 10-15.
    • Handle: RePEc:eee:indorg:v:45:y:2016:i:c:p:10-15
    DOI: 10.1016/j.ijindorg.2015.12.001
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    References listed on IDEAS

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    1. Camelia M. Kuhnen & Paul Oyer, 2016. "Exploration for Human Capital: Evidence from the MBA Labor Market," Journal of Labor Economics, University of Chicago Press, vol. 34(S2), pages 255-286.
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    Cited by:

    1. Inácio Bó & Chiu Yu Ko, 2021. "Competitive screening and information transmission," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 23(3), pages 407-437, June.
    2. , C. & ,, 2013. "Adverse selection and unraveling in common-value labor markets," Theoretical Economics, Econometric Society, vol. 8(3), September.

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    More about this item

    Keywords

    Interview costs; Screening; Professional labor markets;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J44 - Labor and Demographic Economics - - Particular Labor Markets - - - Professional Labor Markets and Occupations

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