Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/267412 
Year of Publication: 
2022
Series/Report no.: 
IZA Discussion Papers No. 15675
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
One of the factors likely to affect the market power of employers is the sensitivity of the flow of recruits to the offered wage, but there is very little research on this. This paper presents a methodology for estimating the wage elasticity of recruitment and applies it to German data. Our estimates of the wage elasticity of recruitment are about 1.4. We also report evidence that high-wage employers are more selective in hiring, in which case the relevant recruitment elasticity should be higher, about 2.2. Together with prior estimates of the quit elasticity these results imply that wages are 72–77% of the marginal product of labour. Further, we find lower elasticities for recruits hired from non-employment as well as for women, non-German nationals, non-prime-age workers, less skilled workers, and workers with less complex jobs.
Subjects: 
monopsony
imperfect labour markets
wage elasticity of recruitment
JEL: 
J42
J31
Document Type: 
Working Paper

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