Four pillars of job applicant screening in China

Chinese employers practice extensive personal screening of job applicants. This study identifies four manifestations of this practice by motive – statistical, customer taste-based, employer taste-based, and regulatory – and evaluates their prevalence, economic determinants and implications for firms’ performance using simultaneous-equations linear and Poisson models. Categorization of a regulatory motive for applicant sorting in China is one contribution of this study. Statistical screening is found to be related positively to employers’ capital intensity, labor-market power and private ownership, and negatively to the supply of skills in provincial labor markets, as may be expected. Customer-taste screening is more prevalent in service and sales industries, as expected, and interestingly in wealthy first-tier cities. Employer-taste screening appears more prevalent at privately-owned firms, and surprisingly in skill-intensive industries and in first-tier cities, potentially reflecting difficulty at distinguishing it from customer-taste screening. Regulatory screening is related positively to firms’ market power, capital intensity and state ownership, as expected. Statistical and customer-taste screening is associated with higher firm profitability, particularly in skill-intensive industries and in service and sales industries, respectively, while employer-taste and regulatory screening is associated with lower profitability, as expected. These results jointly validate our identification of the four pillars of applicant screening.