Aggregate recruiting intensity

Alessandro Gavazza, Simon Mongey, Giovanni L. Violante

Research output: Contribution to journalReview articlepeer-review

5 Scopus citations

Abstract

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).

Original languageEnglish (US)
Pages (from-to)2088-2127
Number of pages40
JournalAmerican Economic Review
Volume108
Issue number8
DOIs
StatePublished - Aug 2018

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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