24 Pages Posted: 11 Jun 2008 Last revised: 10 Oct 2013
Date Written: October 10, 2013
Interviewing in professional labor markets is a costly process for firms. Moreover, poor screening can have a persistent negative impact on firms' bottom lines and candidates' careers. In a simple dynamic model where firms can pay a cost to interview applicants who have private information about their own ability, potentially large inefficiencies arise from information-based unemployment, where able workers are rejected by firms because of their lack of offers in previous interviews. This effect may make the market less efficient than random matching.
Keywords: Decentralized Labor Markets, Professional Labor Markets, Asymmetric Information, Interview costs, Matching
JEL Classification: D82, J21, J44
Suggested Citation: Suggested Citation