The Selection of Talent: Experimental and Structural Evidence from Ethiopia
A. Stefano Caria
- American Economic Review (Forthcoming)
We study how search frictions in the labour 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.
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