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Aggregate recruiting intensity

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  • Gavazza, Alessandro
  • Mongey, Simon
  • Violante, Giovanni L

Abstract

We develop an equilibrium model of firm dynamics with random search in the labor market where hiring firms exert recruiting effort by spending resources to fill vacancies faster. Consistent with microevidence, fast-growing firms invest more in recruiting activities and achieve higher job-filling rates. These hiring decisions of firms aggregate into an index of economywide recruiting intensity. We study how aggregate shocks transmit to recruiting intensity, and whether this channel can account for the dynamics of aggregate matching efficiency during the Great Recession. Productivity and financial shocks lead to sizable pro-cyclical fluctuations in matching efficiency through recruiting effort. Quantitatively, the main mechanism is that firms attain their employment targets by adjusting their recruiting effort in response to movements in labor market slackness

Suggested Citation

  • Gavazza, Alessandro & Mongey, Simon & Violante, Giovanni L, 2018. "Aggregate recruiting intensity," LSE Research Online Documents on Economics 85652, London School of Economics and Political Science, LSE Library.
  • Handle: RePEc:ehl:lserod:85652
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    JEL classification:

    • J1 - Labor and Demographic Economics - - Demographic Economics
    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General

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