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Screening ex-ante or screening on-the-job? The impact of the employment contract

  • Pinoli, Sara

This paper studies how employers collect information about the quality of workers. Two are the strategies: screening ex-ante, through the recruitment process, and monitoring new hires at work, or screening on-the-job. Using two datasets representative of workers in Great Britain, we provide empirical evidence that the optimal choice is related to the type of employment contract offered by the .rm. Our estimates show that temporary workers are associated with lower recruitment effort - in terms of lower cost and higher speed - and closer monitoring than permanent employees. But this relation depends crucially on the type of jobs. Differences in screening effort are substantial for low-level occupations, while the gap is marginal or not significant for high-skilled jobs.

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File URL: http://mpra.ub.uni-muenchen.de/11429/1/MPRA_paper_11429.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 11429.

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Date of creation: 06 Jan 2008
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Handle: RePEc:pra:mprapa:11429
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  1. Pellizzari, Michele, 2005. "Employers' Search and the Efficiency of Matching," IZA Discussion Papers 1862, Institute for the Study of Labor (IZA).
  2. Wasmer, Etienne, 1999. "Competition for Jobs in a Growing Economy and the Emergence of Dualism," Economic Journal, Royal Economic Society, vol. 109(457), pages 349-71, July.
  3. Abraham, Katharine G & Taylor, Susan K, 1996. "Firms' Use of Outside Contractors: Theory and Evidence," Journal of Labor Economics, University of Chicago Press, vol. 14(3), pages 394-424, July.
  4. Francis Kramarz & Marie-Laure Michaud, 2002. "The Shape of Hiring and Separation Costs," Working Papers 2002-38, Centre de Recherche en Economie et Statistique.
  5. Ichino, Andrea & Muehlheusser, Gerd, 2004. "How Often Should you Open the Door? Optimal Monitoring to Screen Heterogeneous Agents," CEPR Discussion Papers 4255, C.E.P.R. Discussion Papers.
  6. César Alonso-Borrego & Jesús Fernández-Villaverde & José E. Galdón-Sánchez, 2004. "Evaluating Labor Market Reforms: A General Equilibrium Approach," Economics Working Papers we042307, Universidad Carlos III, Departamento de Economía.
  7. Katharine G. Abraham, 1988. "Flexible Staffing Arrangements and Employers' Short-Term Adjustment Strategies," NBER Working Papers 2617, National Bureau of Economic Research, Inc.
  8. Hosios, Arthur J & Peters, Michael, 1993. "Self-selection and Monitoring in Dynamic Incentive Problems with Incomplete Contracts," Review of Economic Studies, Wiley Blackwell, vol. 60(1), pages 149-74, January.
  9. Barron, John M & Bishop, John, 1985. "Extensive Search, Intensive Search, and Hiring Costs: New Evidence on Employer Hiring Activity," Economic Inquiry, Western Economic Association International, vol. 23(3), pages 363-82, July.
  10. Susan N. Houseman, 2001. "Why employers use flexible staffing arrangements: Evidence from an establishment survey," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 55(1), pages 149-170, October.
  11. Dominique Goux & Eric Maurin & Marianne Pauchet, 1999. "Fixed-term Contracts and the Dynamics of Labour Demand," Working Papers 99-02, Centre de Recherche en Economie et Statistique.
  12. Bac, Mehmet, 2000. "On-the-Job Specific Training and Efficient Screening," Journal of Labor Economics, University of Chicago Press, vol. 18(4), pages 681-701, October.
  13. O Blanchard & A Landier, 2002. "The Perverse Effects of Partial Labour Market Reform: fixed--Term Contracts in France," Economic Journal, Royal Economic Society, vol. 112(480), pages F214-F244, June.
  14. Jovanovic, Boyan, 1979. "Job Matching and the Theory of Turnover," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 972-90, October.
  15. John M. Abowd & Francis Kramarz, 1997. "The Costs of Hiring and Separations," NBER Working Papers 6110, National Bureau of Economic Research, Inc.
  16. DeVaro, Jed, 2008. "The labor market effects of employer recruitment choice," European Economic Review, Elsevier, vol. 52(2), pages 283-314, February.
  17. Peter Cappelli & Peter D. Sherer, 1990. "Assessing worker attitudes under a two-tier wage plan," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 43(2), pages 225-244, January.
  18. Jed Devaro, 2005. "Employer Recruitment Strategies and the Labor Market Outcomes of New Hires," Economic Inquiry, Western Economic Association International, vol. 43(2), pages 263-282, April.
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