The Selection of Talent: Experimental and Structural Evidence from Ethiopia
American Economic Review
vol. 111,
no. 6, June 2021
(pp. 1757-1806)
Abstract
We study how search frictions in the labor market affect firms' ability to recruit talented workers. In a field experiment in Ethiopia, we show that an employer can attract more talented applicants by offering a small monetary incentive for making a job application. Estimates from a structural model suggest that the intervention is effective because the cost of making a job application is large, and positively correlated with jobseeker ability. We provide evidence that this positive correlation is driven by dynamic selection. In a second experiment, we show that local recruiters underestimate the positive impacts of application incentives.Citation
Abebe, Girum, A. Stefano Caria, and Esteban Ortiz-Ospina. 2021. "The Selection of Talent: Experimental and Structural Evidence from Ethiopia." American Economic Review, 111 (6): 1757-1806. DOI: 10.1257/aer.20190586Additional Materials
JEL Classification
- J23 Labor Demand
- J24 Human Capital; Skills; Occupational Choice; Labor Productivity
- J31 Wage Level and Structure; Wage Differentials
- J64 Unemployment: Models, Duration, Incidence, and Job Search
- O15 Economic Development: Human Resources; Human Development; Income Distribution; Migration