Information Frictions in Hiring Decisions

Objective

Over the last decades, internet has sped up and increased interactions between employers and workers, but aggregate unemployment does not seem to have been much impacted by this revolution. This could be because information frictions are not a first-order contributor of unemployment, or because current tools and institutions do not enable truthful and effective communication between firms and workers. Employers, who are often on the short side of the market, find it difficult and costly to screen potential employees. INASHI aims to provide theoretical frameworks and new empirical evidence about what the remaining information imperfections on the labour market are, how important they are to aggregate unemployment and unemployment of the most vulnerable segments of the labour market, and what solutions can be put in place to improve the recruiting process. INASHI will combine novel data on how firms search for workers on large online job boards with administrative data on vacancies, and matched employer-employee data. It will also leverage a series of randomised controlled trials to test how the provision of new information to employers, whether about candidates or about features of the market, help them make better hiring decisions, leading ultimately to higher aggregate hiring, and higher-quality matches. Three countries will be studied, Austria, France, and Sweden, so that INASHI will provide evidence valid in a variety of contexts.

Keywords

Project’s keywords as indicated by the project coordinator. Not to be confused with the EuroSciVoc taxonomy (Fields of science)

• hiring
• recruitment
• information asymmetries
• firms
• employers
• skills
• signals

Host institution

Beneficiaries (1)