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Designing the market for job vacancies: A trust experiment with employment centers staff

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  • Briscese, Guglielmo
  • Leibbrandt, Andreas

Abstract

We use a trust experiment to study the behavior of 500 employment agents who serve as matchmakers between labor supply and demand. These agents often face difficult trade-offs when they do not find a suitable match within their employment center: they can either place a suboptimal job seeker, let a vacancy go unfilled, or collaborate with other competing employment centers by sharing vacancies and job seekers at the risk of losing business to their competitors. We show in our experiment that lack of trust and norm misperceptions impede such collaboration. In addition, we observe that financial incentives increase collaboration but also employer poaching, and that social incentives in the form of a reputation mechanism decrease poaching. Finally, we find that the agents’ level of norm misperceptions and their willingness to cooperate influence the effectiveness of these incentives. We discuss policy implications and suggest research avenues to study the overlooked role of intermediaries in market design, and in particular in the market of agencies offering employment services.

Suggested Citation

  • Briscese, Guglielmo & Leibbrandt, Andreas, 2022. "Designing the market for job vacancies: A trust experiment with employment centers staff," Labour Economics, Elsevier, vol. 78(C).
    • Handle: RePEc:eee:labeco:v:78:y:2022:i:c:s0927537122001129
    DOI: 10.1016/j.labeco.2022.102222
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    More about this item

    Keywords

    Market design; Market failure; Employment agencies; Labor market; Trust game; Framed field experiment;
    All these keywords.

    JEL classification:

    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • J48 - Labor and Demographic Economics - - Particular Labor Markets - - - Particular Labor Markets; Public Policy

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