Employers' Search and the Efficiency of Matching

Unskilled workers in low productivity jobs typically experience higher labour turnover. This paper shows how this finding is related to variation in the efficiency of the matching process across occupations. If employers find it less profitable to invest in search and screening activities when recruiting for low-productivity jobs, matches at the lower end of the occupation distribution will be more prone to separation. The analysis of a unique sample of British hirings, containing detailed information about employers’ recruitment practices, shows that more intensive recruitment leads to matches of better quality that pay higher wages, last longer and make employers more satisfied with the person taken on.