Vacancies, Employment Outcomes and Firm Growth: Evidence from Denmark

Abstract

We use a comprehensive dataset from Denmark that combines online job advertisements with a matched employer-employee dataset and a firm-level dataset with value added and revenue information to study the relationship between vacancy-posting and various firm outcomes. We find that posting a vacancy significantly increases a firm's hiring rate, and that two-third of the additional hiring occurs in the same quarter while one-third occurs with one quarter lag. The majority of the effect is accounted for by hiring from employment. Small and slow-growth firms show greater hiring responses and the hiring response of high-productivity firms takes longer to materialize. We find that separations that are likely associated with quits predict vacancy posting, consistent with replacement hiring and vacancy chains. Growth in value added and revenue has a strong positive effect on vacancy posting but only when shocks are permanent; transitory shocks do not affect vacancy posting.

Keywords: Vacancies, hiring, separations, employment growth, firm growth, value added, revenue

JEL Classification: J23, J63