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Screening ex-ante or screening on-the-job? The impact of the employment contract

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  • Pinoli, Sara

Abstract

This paper studies how employers collect information about the quality of workers. Two are the strategies: screening ex-ante, through the recruitment process, and monitoring new hires at work, or screening on-the-job. Using two datasets representative of workers in Great Britain, we provide empirical evidence that the optimal choice is related to the type of employment contract offered by the .rm. Our estimates show that temporary workers are associated with lower recruitment effort - in terms of lower cost and higher speed - and closer monitoring than permanent employees. But this relation depends crucially on the type of jobs. Differences in screening effort are substantial for low-level occupations, while the gap is marginal or not significant for high-skilled jobs.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 11429.

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Date of creation: 06 Jan 2008
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Handle: RePEc:pra:mprapa:11429

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Keywords: Fixed-term contracts; Recruitment; Monitoring;

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  1. Abraham, Katharine G & Taylor, Susan K, 1996. "Firms' Use of Outside Contractors: Theory and Evidence," Journal of Labor Economics, University of Chicago Press, vol. 14(3), pages 394-424, July.
  2. César Alonso-Borrego & Jesús Fernández-Villaverde & José E. Galdón-Sánchez, 2004. "Evaluating Labor Market Reforms: A General Equilibrium Approach," PIER Working Paper Archive 04-016, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
  3. Pellizzari, Michele, 2005. "Employers' Search and the Efficiency of Matching," IZA Discussion Papers 1862, Institute for the Study of Labor (IZA).
  4. Ichino, Andrea & Muehlheusser, Gerd, 2004. "How Often Should You Open the Door? Optimal Monitoring to Screen Heterogeneous Agents," IZA Discussion Papers 987, Institute for the Study of Labor (IZA).
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  7. O Blanchard & A Landier, 2002. "The Perverse Effects of Partial Labour Market Reform: fixed--Term Contracts in France," Economic Journal, Royal Economic Society, vol. 112(480), pages F214-F244, June.
  8. Susan N. Houseman, 2000. "Why Employers Use Flexible Staffing Arrangements: Evidence from an Establishment Survey," Upjohn Working Papers and Journal Articles 01-67, W.E. Upjohn Institute for Employment Research.
  9. Jovanovic, Boyan, 1979. "Job Matching and the Theory of Turnover," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 972-90, October.
  10. Etienne Wasmer, 1997. "Competition for Jobs in a Growing Economy and the Emergence of Dualism," Working Papers 97-15, Centre de Recherche en Economie et Statistique.
  11. Abowd, John M. & Kramarz, Francis, 2003. "The costs of hiring and separations," Labour Economics, Elsevier, vol. 10(5), pages 499-530, October.
  12. Jed DeVaro, 2005. "The Labor Market Effects of Employer Recruitment Choice," Labor and Demography 0508006, EconWPA.
  13. Kramarz, Francis & Michaud, Marie-Laure, 2004. "The Shape of Hiring and Separation Costs," IZA Discussion Papers 1170, Institute for the Study of Labor (IZA).
  14. Hosios, Arthur J & Peters, Michael, 1993. "Self-selection and Monitoring in Dynamic Incentive Problems with Incomplete Contracts," Review of Economic Studies, Wiley Blackwell, vol. 60(1), pages 149-74, January.
  15. Peter Cappelli & Peter D. Sherer, 1990. "Assessing worker attitudes under a two-tier wage plan," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 43(2), pages 225-244, January.
  16. Katharine G. Abraham, 1988. "Flexible Staffing Arrangements and Employers' Short-Term Adjustment Strategies," NBER Working Papers 2617, National Bureau of Economic Research, Inc.
  17. Bac, Mehmet, 2000. "On-the-Job Specific Training and Efficient Screening," Journal of Labor Economics, University of Chicago Press, vol. 18(4), pages 681-701, October.
  18. Barron, John M & Bishop, John, 1985. "Extensive Search, Intensive Search, and Hiring Costs: New Evidence on Employer Hiring Activity," Economic Inquiry, Western Economic Association International, vol. 23(3), pages 363-82, July.
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