Hunting for Talent: Firm-driven labor market search in the United States

Category: Applied Microeconomics and Organization Seminar
When: 13 January 2021
, 14:00
 - 15:00


Research suggests that increased digitization of the labor market combined with the changing demand for skill has altered the job-search process. In this article, we argue that these changes have led to increased investments in firm-driven search for talent (or `outbound recruiting'). We investigate this question by proposing a two-sector labor market model and using two data sets, one new, to corroborate our predictions. First, we conduct a nationally representative survey of over 13,000 American workers. We find that nearly 18 percent of all employed workers in the US were hired into their present company by the outbound recruiting effort their employer, either directly or through labor market intermediaries such as a headhunter. This is a substantial increase over the 4.2 percent observed in prior surveys. Moreover, the share of hiring driven by firm-driven search is greatest among higher-income workers, at 20.3 percent, and those with STEM and business degrees, at 20 percent. Considerable regional variation also exists. For example, over a quarter of Silicon Valley workers are hired in this manner, whereas only 14.5 percent of those in Rochester are.  Second, we complement our worker-level results by analyzing a large sample of job postings in the US economy over the past decade. We find that firms, especially those relying on high-skilled labor, are increasingly developing capabilities to better hunt for talent---hiring more recruiters with skill in online search. Given the growth of this practice, we discuss implications for research on firm strategy and labor markets.