Different Degrees of Informational Asymmetry on Job Markets and its Impact on Companies' Recruiting Success

Based on a large survey of German companies, we investigate the influence of job characteristics on the recruiting success on labor markets with different degrees of informational asymmetry. We cluster companies’ recruiting channels in those with low (internal job markets and employee referrals) and high (job advertisements, the Federal Employment Agency and headhunters) degrees of informational asymmetry. We provide evidence that monetary aspects are important when quality aspects of the job and the company are not directly observable by job applicants. However, if recruiting channels are used where the level of asymmetric information is lower because applicants have more reliable information about job and company characteristics, the quality attributes of a workplace, such as flexible work times or a high job responsibility, become influential on the recruiting success. Finally, our results show that applicants with access to more information about the quality aspects of a job also seem to be in a better position to evaluate the information given with regard to their credibility.

Falk, S.;  Hammermann, A.;  Werner, A.; Mohnen, A. (2013): Different Degrees of Informational Asymmetry on Job Markets and its Impact on Companies' Recruiting Success. Journal of Business Economics (ZfB), Vol. 83, No. 4, 295-317.

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