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Inefficient Hiring in Entry-Level Labor Markets

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  • Amanda Pallais

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.

Suggested Citation

  • Amanda Pallais, 2013. "Inefficient Hiring in Entry-Level Labor Markets," NBER Working Papers 18917, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:18917
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    References listed on IDEAS

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    Cited by:

    1. Apostolos Filippas & John Horton & Sehar Noor & Dmitry Sorokin, 2022. "The "coy seller" problem: A market design to reveal willingness to trade," Working Papers 22-03, NET Institute.
    2. Deryugina, Tatyana, 2013. "When Are Appearances Deceiving? The Nature of the Beauty Premium," MPRA Paper 53581, University Library of Munich, Germany.
    3. Moshe A. Barach & Joseph M. Golden & John J. Horton, 2019. "Steering in Online Markets: The Role of Platform Incentives and Credibility," NBER Working Papers 25917, National Bureau of Economic Research, Inc.
    4. Apostolos Filippas & John Horton & Joseph M. Golden, 2017. "Reputation in the Long-Run," CESifo Working Paper Series 6750, CESifo.
    5. Bogliacino, Francesco & Codagnone, Cristiano & Cirillo, Valeria & Guarascio, Dario, 2019. "Quantity and quality of work in the platform economy," GLO Discussion Paper Series 420, Global Labor Organization (GLO).
    6. Apostolos Filippas & John J. Horton & Joseph M. Golden, 2019. "Reputation Inflation," NBER Working Papers 25857, National Bureau of Economic Research, Inc.
    7. Daron Acemoglu & Mohamed Mostagir & Asuman Ozdaglar, 2014. "Managing Innovation in a Crowd," NBER Working Papers 19852, National Bureau of Economic Research, Inc.

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    More about this item

    JEL classification:

    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General

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