Recruitment Policies, Job-Filling Rates, and Matching Efficiency

Recruitment intensity is important for the matching process in the labor market. Using unique linked survey–administrative data, we investigate the relationships between hiring and recruitment policies at the establishment level. Faster hiring goes along with higher search effort, lower hiring standards, and more generous wages. We develop a directed search model that links these patterns to the employment adjustments of heterogeneous firms. The model provides a novel structural decomposition of the matching function that we use to evaluate the relative importance of these recruitment policies at the aggregate level. The calibrated model shows that hiring standards play an important role in explaining differences in matching efficiency across labor markets defined as region/skill cross-products and for the impact of labor market policy, whereas search effort and wage policies play only a minor role.