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Formal search and referrals from a firm's perspective

Author

Listed:
  • Rebien, Martina

    (Center for Mathematical Economics, Bielefeld University)

  • Stops, Michael

    (Center for Mathematical Economics, Bielefeld University)

  • Zaharieva, Anna

    (Center for Mathematical Economics, Bielefeld University)

Abstract
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 firm 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.

Suggested Citation

  • Rebien, Martina & Stops, Michael & Zaharieva, Anna, 2017. "Formal search and referrals from a firm's perspective," Center for Mathematical Economics Working Papers 578, Center for Mathematical Economics, Bielefeld University.
  • Handle: RePEc:bie:wpaper:578
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    References listed on IDEAS

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    1. Matteo Cacciatore & Giuseppe Fiori & Nora Traum, 2020. "Hours and Employment Over the Business Cycle: A Structural Analysis," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 35, pages 240-262, January.
    2. Hensel, Lukas & Tekleselassie, Tsegay & Witte, Marc J., 2021. "Formalized Employee Search and Labor Demand," IZA Discussion Papers 14839, Institute of Labor Economics (IZA).
    3. Mario Bossler & Nicole Gürtzgen & Alexander Kubis & Benjamin Küfner & Benjamin Lochner, 2020. "The IAB Job Vacancy Survey: design and research potential," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 54(1), pages 1-12, December.
    4. Pubali Chakraborty & Kanika Mahajan, 2023. "Firm Size and Female Employment," Working Papers 103, Ashoka University, Department of Economics.
    5. Zainab Iftikhar & Anna Zaharieva, 2019. "General equilibrium effects of immigration in Germany: Search and matching approach," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 31, pages 245-276, January.
    6. Brändle, Tobias & Grunau, Philipp & Haylock, Michael & Kampkötter, Patrick, 2020. "Recruitment strategies and match quality - New evidence from representative linked employer-employee data," University of Tübingen Working Papers in Business and Economics 134, University of Tuebingen, Faculty of Economics and Social Sciences, School of Business and Economics.
    7. Neugart, Michael & Zaharieva, Anna, 2018. "Social Networks, Promotions, and the Glass-Ceiling Effect," Center for Mathematical Economics Working Papers 601, Center for Mathematical Economics, Bielefeld University.
    8. Alaverdyan, Sevak & Zaharieva, Anna, 2022. "Immigration, social networks and occupational mismatch," Economic Modelling, Elsevier, vol. 114(C).
    9. Schierholz, Malte & Brenner, Lorraine & Cohausz, Lea & Damminger, Lisa & Fast, Lisa & Hörig, Ann-Kathrin & Huber, Anna-Lena & Ludwig, Theresa & Petry, Annabell & Tschischka, Laura, 2018. "Eine Hilfsklassifikation mit Tätigkeitsbeschreibungen für Zwecke der Berufskodierung : Leitgedanken und Dokumentation," IAB-Discussion Paper 201813, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    10. Moon, Ji-Woong, 2023. "Strategic referrals and on-the-job search equilibrium," Journal of Monetary Economics, Elsevier, vol. 134(C), pages 135-151.

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    More about this item

    Keywords

    firm size; productivity heterogeneity; search effort; referrals; recruitment strategies;
    All these keywords.

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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