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Home | News | Paper by Pieter Gautier, Xiaoming Cai and Ronald Wolthoff forthcoming in AEJ: Macroeconomics
News | July 05, 2024

Paper by Pieter Gautier, Xiaoming Cai and Ronald Wolthoff forthcoming in AEJ: Macroeconomics

The paper 'Search, Screening, and Sortingby research fellow Pieter Gautier (Vrije Universiteit Amsterdam) and alumni Xiaoming Cai (Peking University HSBC Business School, Shenzhen, China) and Ronald Wolthoff (University of Toronto, Canada) is forthcoming in American Economic Journal: Macroeconomics.

Paper by Pieter Gautier, Xiaoming Cai and Ronald Wolthoff forthcoming in AEJ: Macroeconomics
Abstract

We examine how search frictions impact labor market sorting by constructing a model consistent with evidence that employers interview a subset of a pool of applicants. We derive necessary and sufficient conditions for sorting in applications and matches. Positive sorting is obtained when production complementarities outweigh a counterforce measured by a (novel) quality-quantity elasticity. Interestingly, the threshold for the complementarities depends on the fraction of high-type workers and can be increasing in the number of interviews. Our model shows how policies like Ban the Box can backfire because when screening workers becomes harder, firms may discourage certain workers from applying.

Article citation

Xiaoming Cai, Pieter Gautier, and Ronald Wolthoff, Search, Screening, and Sorting, American Economic Journal: Macroeconomics, forthcoming