The Wage Elasticity of Recruitment

Arbeitspapier

One of the factors likely to affect the market power of employers is the sensitivity of the flow of recruits to the offered wage, but there is very little research on this. This paper presents a methodology for estimating the wage elasticity of recruitment and applies it to German data. Our estimates of the wage elasticity of recruitment are about 1.4. We also report evidence that high-wage employers are more selective in hiring, in which case the relevant recruitment elasticity should be higher, about 2.2. Together with prior estimates of the quit elasticity these results imply that wages are 72–77% of the marginal product of labour. Further, we find lower elasticities for recruits hired from non-employment as well as for women, non-German nationals, non-prime-age workers, less skilled workers, and workers with less complex jobs.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 15675

Classification and Topics

• Classification: Wirtschaft ; Monopsony; Segmented Labor Markets ; Wage Level and Structure; Wage Differentials
• Subject: monopsony ; imperfect labour markets ; wage elasticity of recruitment

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Hirsch, Boris ; Jahn, Elke J. ; Manning, Alan ; Oberfichtner, Michael
• Event: Veröffentlichung
• (who): Institute of Labor Economics (IZA)
• (where): Bonn
• (when): 2022

Further information

• Handle: http://hdl.handle.net/10419/267412
• Last update: 10.03.2025, 11:43 AM CET