TY - JOUR
T1 - Aggregate recruiting intensity
AU - Gavazza, Alessandro
AU - Mongey, Simon
AU - Violante, Giovanni L.
N1 - Funding Information:
* Gavazza: London School of Economics, Houghton Street, London, WC2A 2AE, United Kingdom, and CEPR (email: a.gavazza@lse.ac.uk); Mongey: Kenneth C. Griffin Department of Economics, University of Chicago, Saieh Hall, 5757 S University Avenue, Chicago, IL 60637 (email: mongey@uchicago.edu); Violante: Princeton University, Julis Romo Rabinowitz Building, Princeton, NJ 08544, CEPR, IFS, IZA, and NBER (email: violante@princeton.edu). This paper was accepted to the AER under the guidance of John Leahy, Coeditor. We thank Steve Davis, Jason Faberman, Mark Gertler, Bob Hall, Leo Kaas, Ricardo Lagos, and Giuseppe Moscarini for helpful suggestions at various stages of this project, and our discussants Russell Cooper, Kyle Herkenhoff, William Hawkins, Jeremy Lise, and Nicolas Petrosky-Nadeau for many useful comments. Gavazza gratefully acknowledges support from a British Academy Mid-Career Fellowship. The authors declare that they have no relevant or material financial interests that relate to the research described in this paper.
Publisher Copyright:
© 2018 American Economic Association. All rights reserved.
PY - 2018/8
Y1 - 2018/8
N2 - We develop an equilibrium model of firm dynamics with random search in the labor market where hiring firms exert recruiting effort by spending resources to fill vacancies faster. Consistent with microevidence, fast-growing firms invest more in recruiting activities and achieve higher job-filling rates. These hiring decisions of firms aggregate into an index of economy-wide recruiting intensity. We study how aggregate shocks transmit to recruiting intensity, and whether this channel can account for the dynamics of aggregate matching efficiency during the Great Recession. Productivity and financial shocks lead to sizable procyclical fluctuations in matching efficiency through recruiting effort. Quantitatively, the main mechanism is that firms attain their employment targets by adjusting their recruiting effort in response to movements in labor market slackness. (JEL D22, E24, E32, J23, J41, J63, M51).
AB - We develop an equilibrium model of firm dynamics with random search in the labor market where hiring firms exert recruiting effort by spending resources to fill vacancies faster. Consistent with microevidence, fast-growing firms invest more in recruiting activities and achieve higher job-filling rates. These hiring decisions of firms aggregate into an index of economy-wide recruiting intensity. We study how aggregate shocks transmit to recruiting intensity, and whether this channel can account for the dynamics of aggregate matching efficiency during the Great Recession. Productivity and financial shocks lead to sizable procyclical fluctuations in matching efficiency through recruiting effort. Quantitatively, the main mechanism is that firms attain their employment targets by adjusting their recruiting effort in response to movements in labor market slackness. (JEL D22, E24, E32, J23, J41, J63, M51).
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U2 - 10.1257/aer.20161420
DO - 10.1257/aer.20161420
M3 - Review article
AN - SCOPUS:85050729421
SN - 0002-8282
VL - 108
SP - 2088
EP - 2127
JO - American Economic Review
JF - American Economic Review
IS - 8
ER -