Formal search and referrals from a firm's perspective

Arbeitspapier

This study explores the relationship between firms' characteristics and their recruitment strategies. We propose a model based on a search and matching framework with two search channels: a formal channel which is costly for firms and a costless informal channel, i.e. referrals. There is a continuum of heterogeneous vacancies in our model where every frm with an open vacancy chooses an optimal search effort in order to attract job candidates. This search effort depends on the productivity of the firm and, contrary to the previous literature, workers send simultaneous applications to open vacancies. We assess the model predictions by using the IAB Job Vacancy Survey, a representative survey among human resource managers in Germany reporting information about their most recent recruitment case. Based on the finding that firm size and productivity are positively correlated we show that: (1) Larger firms invest more effort into formal search activities; (2) Firms invest more formal search effort in labour markets for more educated workers; (3) The positive relationship between firm's size and formal search intensity can also be observed for firms that don't use referrals; (4) Firms that use referrals as a search channel invest less effort into formal search compared to firms that don't use referrals; (5) Larger firms are less likely to hire an applicant by referral than smaller firms, and (6) More intensive search effort leads to a larger number of applications.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IAB-Discussion Paper ; No. 33/2017

Classification and Topics

• Classification: Wirtschaft ; Labor Force and Employment, Size, and Structure ; Labor Demand ; Labor Turnover; Vacancies; Layoffs ; Unemployment: Models, Duration, Incidence, and Job Search
• Subject: firm size ; productivity heterogeneity ; search effort ; referrals ; recruitment strategies

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Rebien, Martina ; Stops, Michael ; Zaharieva, Anna
• Event: Veröffentlichung
• (who): Institut für Arbeitsmarkt- und Berufsforschung (IAB)
• (where): Nürnberg
• (when): 2017

Further information

• Handle: http://hdl.handle.net/10419/182138
• Last update: 10.03.2025, 11:43 AM CET