Home | Events Archive | Hiring Difficulties and Firms' Growth

Hiring Difficulties and Firms' Growth

  • Series
  • Speaker(s)
    Maddalena Ronchi (Bocconi University, Italy)
  • Field
    Empirical Microeconomics
  • Location
    Erasmus University Rotterdam, Campus Woudestein, room LAN 1.14
  • Date and time

    January 27, 2023
    15:30 - 16:45

This paper studies the role of recruitment difficulties on firms' growth by combining unique vacancy-level data from France with an identification strategy based on a shift-share design. Specifically, we exploit cross-firm variation in exposure to recruiting difficulties stemming from initial differences in firms’ occupational mix and we leverage recruiting difficulties shifts using market-level changes in the time it takes to fill a vacancy in a given occupation, with a leave-one-out correction at the industry-level. We find that higher hiring difficulties translate into fewer vacancies posted by firms employing workers in hard-to-recruit occupations. This hampers their employment, with a one-standard deviation increase in predicted recruiting time decreasing firms' employment by 5 to 9%. These effects are especially large when firms are labor-intensive and when they employ a higher share of workers in highly specialized occupations. Complementing the results on employment, we find evidence of negative effects also on firms’ investment, profits, and sales. Finally, we show that firms partially adjust to hiring difficulties by increasing wages, retaining incumbent workers, and promoting them higher up into high-pay occupations. Joint paper with Thomas Le Barbanchon and Julien Sauvagnat.

Link to paper.