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Avoiding Labor Shortages by Employer Signaling: On the Importance of Good Work Climate and Labor Relations

  • Uschi Backes-Gellner
  • Simone N. Tuor

Reversing the original signaling model, this study explains how employers signal the non-observable quality of their workplace and thereby reduce labor shortages. Based on a company data set of 204 German firms, the authors find, as predicted by their theory, that the existence of a works council, an apprenticeship training program, and a high-quality incumbent workforce significantly improves recruitment success because they all reliably signal appealing work places. At the same time, frequent hiring of workers with non-matching qualifications reduces recruitment success because it signals low-quality workplaces. The authors’ research reveals that certain aspects of labor relations and workplace characteristics exert a significant impact on recruitment success, which cannot be explained by conventional theoretical arguments.

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Article provided by ILR Review, Cornell University, ILR School in its journal ILR Review.

Volume (Year): 63 (2010)
Issue (Month): 2 (January)
Pages: 271-286

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Handle: RePEc:ilr:articl:v:63:y:2010:i:2:p:271-286
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  1. John T. Addison & Thorsten Schank & Claus Schnabel & Joachim Wagner, 2007. "Do Works Councils Inhibit Investment?," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 60(2), pages 187-203, January.
  2. Rodney Fort & James Quirk, 1995. "Cross-subsidization, Incentives, and Outcomes in Professional Team Sports Leagues," Journal of Economic Literature, American Economic Association, vol. 33(3), pages 1265-1299, September.
  3. Stefan Szymanski, 2003. "The Economic Design of Sporting Contests," Journal of Economic Literature, American Economic Association, vol. 41(4), pages 1137-1187, December.
  4. Whitney, James D, 1993. "Bidding Till Bankrupt: Destructive Competition in Professional Team Sports," Economic Inquiry, Western Economic Association International, vol. 31(1), pages 100-115, January.
  5. Mari Sako & Gregory Jackson, 2006. "Strategy meets institutions: The transformation of management-labor relations at Deutsche Telekom and NTT," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 59(3), pages 347-366, April.
  6. Sloane, Peter J, 1971. "The Economics of Professional Football: The Football Club as a Utility Maximiser," Scottish Journal of Political Economy, Scottish Economic Society, vol. 18(2), pages 121-46, June.
  7. Hausman, Jerry, 2015. "Specification tests in econometrics," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 38(2), pages 112-134.
  8. KÉSENNE, Stefan, . "The salary cap proposal of the G-14 in European football," Working Papers 2003018, University of Antwerp, Faculty of Applied Economics.
  9. Sonia Falconieri & Frédéric Palomino & József Sákovics, 2004. "Collective Versus Individual Sale of Television Rights in League Sports," Journal of the European Economic Association, MIT Press, vol. 2(5), pages 833-862, 09.
  10. Jeffery Borland, 2003. "Demand for Sport," Oxford Review of Economic Policy, Oxford University Press, vol. 19(4), pages 478-502, Winter.
  11. Vrooman, John, 2000. "The Economics of American Sports Leagues," Scottish Journal of Political Economy, Scottish Economic Society, vol. 47(4), pages 364-98, September.
  12. Spence, A Michael, 1973. "Job Market Signaling," The Quarterly Journal of Economics, MIT Press, vol. 87(3), pages 355-74, August.
  13. Lutz Bellmann & Uwe Blien, 2001. "Wage Curve Analyses of Establishment Data from Western Germany," ILR Review, Cornell University, ILR School, vol. 54(4), pages 851-863, July.
  14. John S. Heywood & Uwe Jirjahn, 2002. "Payment schemes and gender in Germany," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 56(1), pages 44-64, October.
  15. Stefan Kesenne, 2000. "Revenue Sharing and Competitive Balance in Professional Team Sports," Journal of Sports Economics, , vol. 1(1), pages 56-65, February.
  16. Alberto Bayo-Moriones & Pedro Ortín-Ángel, 2006. "Internal promotion versus external recruitment in industrial plants in Spain," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 59(3), pages 451-470, April.
  17. Alberto Bayo-Moriones & Pedro Ortín-Ãngel, 2006. "Internal Promotion versus External Recruitment in Industrial Plants in Spain," ILR Review, Cornell University, ILR School, vol. 59(3), pages 451-470, April.
  18. KÉSENNE, Stefan, . "The impact of salary caps in professional team sports," Working Papers 1999026, University of Antwerp, Faculty of Applied Economics.
  19. Lutz Bellmann & Uwe Blien, 2001. "Wage curve analyses of establishment data from western Germany," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 54(4), pages 851-863, July.
  20. Mari Sako & Gregory Jackson, 2006. "Strategy Meets Institutions: The Transformation of Management-Labor Relations at Deutsche Telekom and Ntt," ILR Review, Cornell University, ILR School, vol. 59(3), pages 347-366, April.
  21. Holzer, Harry J, 1994. "Job Vacancy Rates in the Firm: An Empirical Analysis," Economica, London School of Economics and Political Science, vol. 61(241), pages 17-36, February.
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