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Discretion in Hiring

Author

Listed:
  • Mitchell Hoffman
  • Lisa B. Kahn
  • Danielle Li

Abstract

Job testing technologies enable firms to rely less on human judgement when making hiring decisions. Placing more weight on test scores may improve hiring decisions by reducing the influence of human bias or mistakes but may also lead firms to forgo the potentially valuable private information of their managers. We study the introduction of job testing across 15 firms employing low-skilled service sector workers. When faced with similar applicant pools, we find that managers who appear to hire against test recommendations end up with worse average hires. This suggests that managers often overrule test recommendations because they are biased or mistaken, not only because they have superior private information.

Suggested Citation

  • Mitchell Hoffman & Lisa B. Kahn & Danielle Li, 2015. "Discretion in Hiring," NBER Working Papers 21709, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:21709
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • M51 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Firm Employment Decisions; Promotions

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