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Evidence on the relationship between recruiting and the starting wage

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  • Faberman, R. Jason
  • Menzio, Guido

Abstract

Using data from the Employment Opportunity Pilot Project, we examine the relationship between the starting wage paid to the worker filling a vacancy, the number of applications attracted by the vacancy, the number of candidates interviewed for the vacancy, and the duration of the vacancy. We find that the wage is positively related to the duration of a vacancy and negatively related to the number of applications and interviews per week. We show that these surprising findings are consistent with a view of the labor market in which firms post wages and workers direct their search based on these wages if workers and jobs are heterogeneous and the interaction between the worker's type and the job's type in production satisfies some rather natural assumptions.

Suggested Citation

  • Faberman, R. Jason & Menzio, Guido, 2018. "Evidence on the relationship between recruiting and the starting wage," Labour Economics, Elsevier, vol. 50(C), pages 67-79.
    • Handle: RePEc:eee:labeco:v:50:y:2018:i:c:p:67-79
    DOI: 10.1016/j.labeco.2017.01.003
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    More about this item

    Keywords

    Wage posting; Employer recruiting; Hiring; Vacancies; Directed search;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General

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