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Match efficiency and firms' hiring standards

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  • Sedláček, Petr

Abstract

During the last recession, new hires were lower than what would be predicted by a standard matching function and the observed ratio of searching workers and firms. This paper first estimates U.S. match efficiency as an exogenous residual in the matching function using a simple search and matching model. It finds match efficiency to be pro-cyclical and to account for about 1/4 of unemployment increases during the most severe recessions. Second, this paper proposes a model with endogenous separations and firing costs that endogenizes match efficiency, which is driven by firms’ hiring standards. The model can explain almost 1/2 of the variation in the initial estimate of match efficiency.

Suggested Citation

  • Sedláček, Petr, 2014. "Match efficiency and firms' hiring standards," Journal of Monetary Economics, Elsevier, vol. 62(C), pages 123-133.
  • Handle: RePEc:eee:moneco:v:62:y:2014:i:c:p:123-133
    DOI: 10.1016/j.jmoneco.2013.10.001
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    References listed on IDEAS

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    Cited by:

    1. Francesco Zanetti & Konstantinos Theodoridis, 2018. "State Dependence in Labor Market Fluctuations: Evidence, Theory, and Policy Implications," Economics Series Working Papers 856, University of Oxford, Department of Economics.
    2. Marios Michaelides & Peter Mueser, 2018. "Are Reemployment Services Effective? Experimental Evidence from the Great Recession," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 37(3), pages 546-570, June.
    3. Sabine Klinger & Enzo Weber, 2016. "Decomposing Beveridge Curve Dynamics By Correlated Unobserved Components," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 78(6), pages 877-894, December.
    4. Alessandro Gavazza & Simon Mongey & Giovanni L. Violante, 2018. "Aggregate Recruiting Intensity," American Economic Review, American Economic Association, vol. 108(8), pages 2088-2127, August.
    5. Steven Kivinen, 2017. "Unemployment Volatility and Networks," Working Papers daleconwp2017-02, Dalhousie University, Department of Economics.
    6. Carrillo-Tudela, Carlos & Hobijn, Bart & She, Powen & Visschers, Ludo, 2016. "The extent and cyclicality of career changes: Evidence for the U.K," European Economic Review, Elsevier, vol. 84(C), pages 18-41.
    7. Peter Mueser & Marios Michaelides, 2015. "Are Reemployment Services Effective? Experimental Evidence from the Great Recession (WP 15-09 is now WP 18-04)," Working Papers 1509, Department of Economics, University of Missouri, revised Feb 2018.
    8. Yannic Stucki & Jacqueline Thomet, 2018. "The effects of firing costs on employment and hours per employee," Diskussionsschriften dp1820, Universitaet Bern, Departement Volkswirtschaft.
    9. Shu Lin Wee & Sushant Acharya, 2016. "Rational Inattention in Hiring Decisions," 2016 Meeting Papers 489, Society for Economic Dynamics.
    10. repec:bla:obuest:v:79:y:2017:i:1:p:101-123 is not listed on IDEAS

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