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Hiring Procedures in the Firm: Their Economic Determinants and Outcomes

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Author Info
Harry J. Holzer

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Abstract

This paper presents an economic analysis of recruitment and screening procedures chosen by firms as they hire new workers. After reviewing the relevant literature within the labor economics and human resources fields, I outline an employer search model in which firms choose hiring procedures as well as reservation productivity levels. The outcomes determined by these choices (e-g., expected vacancy durations, expected worker productivity and characteristics, and total resources devoted to hiring) are considered as well. I then present some empirical evidence on the determinants and outcomes of hiring procedures from a survey of firms. Among other things, the results show some evidence of higher productivity and lower turnover among those hired through referrals from current employees. Total time spent on hiring when using these referrals is also shown to be lower than when other methods are used. However, those hired through these referrals are less likely to be young or female than are those hired through other methods. The implications of these findings for "efficiency" and "equity" considerations are then discussed.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 2185.

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Date of creation: Mar 1987
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Handle: RePEc:nbr:nberwo:2185

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  1. Pissarides, C A, 1984. "Efficient Job Rejection," Economic Journal, Royal Economic Society, vol. 94(376a), pages 97-108, Supplemen. [Downloadable!] (restricted)
  2. Willis, Robert J & Rosen, Sherwin, 1979. "Education and Self-Selection," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages S7-36, October. [Downloadable!] (restricted)
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  3. Cain, Glen G, 1976. "The Challenge of Segmented Labor Market Theories to Orthodox Theory: A Survey," Journal of Economic Literature, American Economic Association, vol. 14(4), pages 1215-57, December. [Downloadable!] (restricted)
  4. Albrecht, James W & Axell, Bo, 1984. "An Equilibrium Model of Search Unemployment," Journal of Political Economy, University of Chicago Press, vol. 92(5), pages 824-40, October. [Downloadable!] (restricted)
    Other versions:
  5. Harry J. Holzer, 1986. "Informal Job Search and Black Youth Unemployment," NBER Working Papers 1860, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  6. Lippman, Steven A & McCall, John J, 1976. "The Economics of Job Search: A Survey," Economic Inquiry, Oxford University Press, vol. 14(3), pages 347-68, September.
  7. Marshall, Ray, 1974. "The Economics of Racial Discrimination: A Survey," Journal of Economic Literature, American Economic Association, vol. 12(3), pages 849-71, September. [Downloadable!] (restricted)
  8. Dickens, William T & Lang, Kevin, 1985. "A Test of Dual Labor Market Theory," American Economic Review, American Economic Association, vol. 75(4), pages 792-805, September. [Downloadable!] (restricted)
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  9. F. Theodore Malm, 1954. "Recruiting patterns and the functioning of labor markets," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 7(4), pages 507-525, July.
  10. Graham L. Reid, 1972. "Job search and the effectiveness of job-finding methods," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 25(4), pages 479-495, July.
  11. Kenneth Arrow, 1971. "The Theory of Discrimination," Working Papers 403, Princeton University, Department of Economics, Industrial Relations Section.. [Downloadable!]
  12. Spence, A Michael, 1973. "Job Market Signaling," The Quarterly Journal of Economics, MIT Press, vol. 87(3), pages 355-74, August. [Downloadable!] (restricted)
  13. McCall, John J, 1970. "Economics of Information and Job Search," The Quarterly Journal of Economics, MIT Press, vol. 84(1), pages 113-26, February. [Downloadable!] (restricted)
  14. Datcher, Linda, 1983. "The Impact of Informal Networks of Quit Behavior," The Review of Economics and Statistics, MIT Press, vol. 65(3), pages 491-95, August. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Falk, Armin & Kosfeld, Michael, 2003. "It's All About Connections: Evidence on Network Formation," CEPR Discussion Papers 3970, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  2. Joshua C. Pinkston, 2006. "How Much Do Employers Learn from Referrals?," Working Papers 392, U.S. Bureau of Labor Statistics. [Downloadable!]
  3. repec:ese:iserwp: is not listed on IDEAS
  4. Frances X. Frei & Patrick T. Harker & Larry W. Hunter, 1995. "Performance in Consumer Financial Services Organizations: Framework and Results from the Pilot Study," Center for Financial Institutions Working Papers 95-03, Wharton School Center for Financial Institutions, University of Pennsylvania. [Downloadable!]
  5. Fontaine, François, 2004. "Do Workers Really Benefit From Their Social Networks?," IZA Discussion Papers 1282, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  6. Thomas Hyclak & Larry Taylor & James Stewart, 1992. "Some new historical evidence on the impact of affirmative action: Detroit, 1972," The Review of Black Political Economy, Springer, vol. 21(2), pages 81-98, December. [Downloadable!] (restricted)
  7. Kugler, Adriana D., 2002. "Employee Referrals and Efficiency Wages," CEPR Discussion Papers 3682, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  8. François Fontaine, 2005. "Why Are Similar Workers Paid Differently? The Role of Social Networks," IZA Discussion Papers 1786, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  9. Michele Pellizzari, 2004. "Do Friends and Relatives Really Help in Getting a Good Job?," CEP Discussion Papers dp0623, Centre for Economic Performance, LSE. [Downloadable!]
  10. Kugler, Adriana D., 2002. "Employee Referrals and Efficiency Wages," IZA Discussion Papers 633, Institute for the Study of Labor (IZA). [Downloadable!]
  11. Peter Cappelli & Steffi L Wilk, 1997. "Understanding Selection Processes: Organization Determinants and Performance Outcomes," Working Papers 97-14, Center for Economic Studies, U.S. Census Bureau. [Downloadable!]
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