Employer Search and Worker-Firm Match Quality

Abstract

Labor economists are devoting increasing attention to employer search. The existing literature falls into two categories: research on information networks and research on search effort. The empirical research on search effort considers the determinants of effort but does not attempt to measure its effectiveness. Other research considers the impact of information networks on labor market outcomes, but ignores the role of search effort. Using data from the Employment Opportunities Pilot Project (EOPP), this paper attempts to synthesize the empirical research on employer search effort by considering information networks and search effort together within a job-matching framework. Specifically, the effects of employer search on employee turnover are examined using both hazard models and Probit analysis. The effect of employer search on wage growth within the job is also considered. I find, consistent with prior research, that when firms search through informal networks, the resulting worker-firm matches are superior to those resulting from search through formal networks. I also find that the impact of employer search effort depends upon the type of information network used in the search process.

JEL Classification: J6, J3