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Hiring Procedures in the Firm: Their Economic Determinants and Outcomes

  • Harry J. Holzer

This paper presents an economic analysis of recruitment and screening procedures chosen by firms as they hire new workers. After reviewing the relevant literature within the labor economics and human resources fields, I outline an employer search model in which firms choose hiring procedures as well as reservation productivity levels. The outcomes determined by these choices (e-g., expected vacancy durations, expected worker productivity and characteristics, and total resources devoted to hiring) are considered as well. I then present some empirical evidence on the determinants and outcomes of hiring procedures from a survey of firms. Among other things, the results show some evidence of higher productivity and lower turnover among those hired through referrals from current employees. Total time spent on hiring when using these referrals is also shown to be lower than when other methods are used. However, those hired through these referrals are less likely to be young or female than are those hired through other methods. The implications of these findings for "efficiency" and "equity" considerations are then discussed.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 2185.

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Date of creation: Mar 1987
Date of revision:
Publication status: published as Holzer, Harry J. "Hiring Procedures in the Firm: Their Economic Determinants and Outcomes," Human Resources and Firm Performance, ed. by Richard Block, et. al. Industrial Relations Research Association, 1987.
Handle: RePEc:nbr:nberwo:2185
Note: LS
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  1. F. Theodore Malm, 1954. "Recruiting Patterns and the Functioning of Labor Markets," ILR Review, Cornell University, ILR School, vol. 7(4), pages 507-525, July.
  2. Willis, Robert J & Rosen, Sherwin, 1979. "Education and Self-Selection," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages S7-36, October.
  3. Marshall, Ray, 1974. "The Economics of Racial Discrimination: A Survey," Journal of Economic Literature, American Economic Association, vol. 12(3), pages 849-71, September.
  4. Albrecht, James W & Axell, Bo, 1983. "An Equilibrium Model of Search Unemployment," Working Paper Series 99, Research Institute of Industrial Economics.
  5. Kenneth Arrow, 1971. "The Theory of Discrimination," Working Papers 403, Princeton University, Department of Economics, Industrial Relations Section..
  6. J. J. McCall, 1970. "Economics of Information and Job Search," The Quarterly Journal of Economics, Oxford University Press, vol. 84(1), pages 113-126.
  7. Pissarides, C A, 1984. "Efficient Job Rejection," Economic Journal, Royal Economic Society, vol. 94(376a), pages 97-108, Supplemen.
  8. Holzer, Harry J, 1987. "Informal Job Search and Black Youth Unemployment," American Economic Review, American Economic Association, vol. 77(3), pages 446-52, June.
  9. Michael Spence, 1973. "Job Market Signaling," The Quarterly Journal of Economics, Oxford University Press, vol. 87(3), pages 355-374.
  10. Graham L. Reid, 1972. "Job Search and the Effectiveness of Job-Finding Methods," ILR Review, Cornell University, ILR School, vol. 25(4), pages 479-495, July.
  11. William T. Dickens & Kevin Lang, 1984. "A Test of Dual Labor Market Theory," NBER Working Papers 1314, National Bureau of Economic Research, Inc.
  12. Becker, Gary S., 1971. "The Economics of Discrimination," University of Chicago Press Economics Books, University of Chicago Press, edition 2, number 9780226041162, April.
  13. Lippman, Steven A & McCall, John J, 1976. "The Economics of Job Search: A Survey," Economic Inquiry, Western Economic Association International, vol. 14(3), pages 347-68, September.
  14. Cain, Glen G, 1976. "The Challenge of Segmented Labor Market Theories to Orthodox Theory: A Survey," Journal of Economic Literature, American Economic Association, vol. 14(4), pages 1215-57, December.
  15. Datcher, Linda, 1983. "The Impact of Informal Networks of Quit Behavior," The Review of Economics and Statistics, MIT Press, vol. 65(3), pages 491-95, August.
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