The search behaviour of firms and workers in OECD labour markets
Most labour economists today agree on a view of the labour market in which various types of imperfections prevent firms with unfilled vacancies and workers who want a job to meet readily. This dissertation explores several empirical aspects of the behaviour of workers and firms in search for partners to form employment relationships. The first chapter looks at the effect of the interaction between welfare programmes on the search behaviour of the unemployed. It suggests that unemployment insurance recipients, who are also entitled to some kind of social assistance, are less concerned about changes in their unemployment benefits. Empirical evidence from the European Community Household Panel (ECHP) shows that the unemployed who are eligible for social assistance programmes leave unemployment at a lower rate than similar individuals who only receive unemployment compensation. The second chapter looks at the characteristics of jobs found through formal and informal methods. Data from the ECHP show that wage premiums and wage penalties to finding jobs through personal contacts are equally frequent and of about the same size. This result is rationalised with a simple model in which firms choose their optimal recruitment strategies. In labour markets where employers invest heavily in formal recruitment, matches created through this channel are of better quality than those created through informal networks. The empirical predictions of the theory are successfully tested using a combination of the ECHP and industry- level data on recruitment costs. The last chapter uses an original sample of British recruits to investigate the role of employers' recruitment strategies on labour turnover. A simple extension of the model presented in the previous chapter shows that firms invest more in recruitment for high-productivity jobs, that this leads to better matches and, consequently, to lower turnover at the top than at the bottom of the jobs' distribution.