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The Wage Elasticity of Recruitment

Author

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  • Hirsch, Boris
  • Jahn, Elke J.
  • Manning, Alan
  • Oberfichtner, Michael

Abstract

One of the factors likely to affect the market power of employers is the sensitivity of the flow of recruits to the offered wage, but there is very little research on this. This paper presents a methodology for estimating the wage elasticity of recruitment and applies it to German data. Our estimates of the wage elasticity of recruitment are about 1.4. We also report evidence that high-wage employers are more selective in hiring, in which case the relevant recruitment elasticity should be higher, about 2.2. Together with prior estimates of the quit elasticity these results imply that wages are 72–77% of the marginal product of labour. Further, we find lower elasticities for recruits hired from non-employment as well as for women, non-German nationals, non-prime-age workers, less skilled workers, and workers with less complex jobs.
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Suggested Citation

  • Hirsch, Boris & Jahn, Elke J. & Manning, Alan & Oberfichtner, Michael, 2023. "The Wage Elasticity of Recruitment," VfS Annual Conference 2023 (Regensburg): Growth and the "sociale Frage" 277585, Verein für Socialpolitik / German Economic Association.
    • Handle: RePEc:zbw:vfsc23:277585
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    Cited by:

    1. Nikhil Datta, 2023. "The measure of monopsony: the labour supply elasticity to the firm and its constituents," CEP Discussion Papers dp1930, Centre for Economic Performance, LSE.
    2. Bassier, Ihsaan & Manning, Alan & Petrongolo, Barbara, 2023. "Vacancy Duration and Wages," IZA Discussion Papers 16371, Institute of Labor Economics (IZA).
    3. Datta, Nikhil, 2023. "The measure of monopsony: the labour supply elasticity to the firm and its constituents," LSE Research Online Documents on Economics 121312, London School of Economics and Political Science, LSE Library.

    More about this item

    JEL classification:

    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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