The Labor Market Signaling Value of Promotions
42 Pages Posted: 2 Dec 2016 Last revised: 20 Aug 2017
Date Written: August 18, 2017
Do firms learn from other firms' human resource allocation decisions? This paper studies this question in the context of worker promotions, which according to theory serve as informative signals to external employers under asymmetric learning about employee ability. Using variation in the timing of promotion reports on LinkedIn CVs, we implement a differences-in-differences strategy to demonstrate that online promotion reports increase recruiter-initiated worker contacts ("InMails"). The signaling impact of promotions is concentrated among those who have recently attracted previous recruiter interest; this effect is subsumed by firm and job heterogeneity, suggesting that factors idiosyncratic to individual users are less important relative to firm and job quality in providing labor market visibility.
JEL Classification: M51, D82, D83
Suggested Citation: Suggested Citation