Wednesday, February 1, 2012

Employer recruiting intensity

I was reading/skimming this paper by Davis et al. and in the abstract, they write:

"This paper is the first to study vacancies, hires, and vacancy yields at the establishment level in the Job Openings and Labor Turnover Survey, a large sample of U.S. employers. ... We show that (a) employers rely heavily on other instruments, in addition to vacancy numbers, as they vary hires, (b) the hiring technology exhibits strong increasing returns to vacancies at the establishment level, or both. We also develop evidence that effective recruiting intensity per vacancy varies over time, accounting for about 35% of movements in aggregate hires."

In a nutshell, they document that recruiting intensity varies across time and that this variation has a big effect on the number of aggregate hires. What's interesting is that the labor literature tends to focus on search intensity by workers, with firm search intensity comparatively understudied, but this paper suggests that ignoring employer efforts is likely to give a (very) incomplete impression. My guess is that this bias in the literature comes from the comparative lack of employer data on matching, though JOLTS  (which this paper uses) is ameliorating the problem.

On oDesk, we've got excellent visibility on employer recruiting. Below is the "so what" plot from a recent experiment where we "recommended" contractors to employers (based on our analysis of what the job consisted of). The recommendations came immediately after the employer posted the job. We also made it easier for that employer to invite those recommended contractors to apply. The y-axis is the fraction of jobs where the employer made at least one invitation; treatment and control are side-by-side. We can see that regardless of category, the treatment was generally effective in increasing the number of invitations.  But I think the striking thing is how much variation there is in "levels" of recruiting by category: in the control admin group, less than 10% of employers recruited, while in sales, it's almost 25%.

Presumably the difference depends on a number of factors: how many applicants the job will get organically, how close a substitutes are the different applicants, the value to the firm of filling the vacancy to the firm and so on. It also clearly matters how easy it is to search/recruit, given the effectiveness of our pretty lightweight intervention.  From a welfare standpoint, this last point about the role of search/recruiting cost is potentially interesting, as reducing employer search frictions/costs technologically is, at least in online labor markets, a highly scalable proposition.

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