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Search, Screening, and Sorting

Author

Listed:
  • Xiaoming Cai
  • Pieter Gautier
  • Ronald Wolthoff

Abstract

We examine how search frictions impact labor market sorting by constructing a model consistent with evidence that employers interview a subset of a pool of applicants. We derive necessary and sufficient conditions for sorting in applications and matches. Positive sorting is obtained when production complementarities outweigh a counterforce measured by a (novel) quality-quantity elasticity. Interestingly, the threshold for the complementarities depends on the fraction of high-type workers and can be increasing in the number of interviews. Our model shows how policies like Ban the Box can backfire because when screening workers becomes harder, firms may discourage certain workers from applying.

Suggested Citation

  • Xiaoming Cai & Pieter Gautier & Ronald Wolthoff, 2025. "Search, Screening, and Sorting," American Economic Journal: Macroeconomics, American Economic Association, vol. 17(3), pages 205-236, July.
    • Handle: RePEc:aea:aejmac:v:17:y:2025:i:3:p:205-36
    DOI: 10.1257/mac.20240026
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    More about this item

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • M51 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Firm Employment Decisions; Promotions

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