The wage elasticity of recruitment

Boris, Hirsch, Jahn, Elke J., Manning, Alan ORCID: 0000-0002-7884-3580 and Oberfichtner, Michael (2022) The wage elasticity of recruitment. CEP Discussion Papers (CEPDP1883). London School of Economics and Political Science. Centre for Economic Performance, London, UK.

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Abstract

One of the factors affecting the market power of employers is the extent to which higher wages makes recruitment easier. 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.

Item Type:	Monograph (Discussion Paper)
Official URL:	https://cep.lse.ac.uk/_new/publications/discussion...
Additional Information:	© 2022 The Author(s)
Divisions:	Economics
Subjects:	H Social Sciences > HC Economic History and Conditions H Social Sciences > HD Industries. Land use. Labor
JEL classification:	J - Labor and Demographic Economics > J4 - Particular Labor Markets > J42 - Monopsony; Segmented Labor Markets J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J31 - Wage Level and Structure; Wage Differentials by Skill, Training, Occupation, etc.
Date Deposited:	26 Jan 2023 15:33
Last Modified:	11 Dec 2024 19:43
URI:	http://eprints.lse.ac.uk/id/eprint/118033

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