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Aggregate recruiting intensity

Gavazza, Alessandro and Mongey, Simon and Violante, Giovanni L (2017) Aggregate recruiting intensity. American Economic Review. ISSN 0002-8282 (In Press)

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Abstract

We develop an equilibrium model of firm dynamics with random search in the labor market where hiring firms exert recruiting effort by spending resources to fill vacancies faster. Consistent with microevidence, fast-growing firms invest more in recruiting activities and achieve higher job-filling rates. These hiring decisions of firms aggregate into an index of economywide recruiting intensity. We study how aggregate shocks transmit to recruiting intensity, and whether this channel can account for the dynamics of aggregate matching efficiency during the Great Recession. Productivity and financial shocks lead to sizable pro-cyclical fluctuations in matching efficiency through recruiting effort. Quantitatively, the main mechanism is that firms attain their employment targets by adjusting their recruiting effort in response to movements in labor market slackness

Item Type: Article
Official URL: https://www.aeaweb.org/journals/aer
Additional Information: © 2017 American Economic Association
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HD Industries. Land use. Labor
Sets: Departments > Economics
Date Deposited: 20 Nov 2017 13:51
Last Modified: 20 Nov 2017 14:01
URI: http://eprints.lse.ac.uk/id/eprint/85652

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