Firm-Side Reservation Quality Downgrading
RCTReview
Employers frequently impose unnecessarily strict degree requirements for professional positions, underestimating the competence of non-degree applicants while overestimating the talent pool of university graduates. This structural bias causes persistent open vacancies and inefficient screening practices.
Picture this
Imagine a restaurant manager who insists on hiring only Michelin-trained chefs for basic line-cook roles, leaving half the kitchen unmanned because those chefs demand higher pay than offered. After spending a weekend interviewing candidates and meeting no affordable Michelin chefs, the manager lowers the hiring threshold to experienced line cooks, successfully staffing the kitchen.
What the evidence says
Among firms with high professional recruitment needs, market exposure significantly reduced the proportion of professional hires holding university degrees by 7 percentage points (p < 0.10) and reduced expected 12-month future hiring targets by 30% (from 45.6 to 32.3 workers, p < 0.10), aligning recruitment criteria with candidate availability.
- Who was studied
- N = 473 formal sector employers across manufacturing, services, hospitality, construction, and health/education in Addis Ababa, Ethiopia.
- How
- Block-randomized field trial measuring employer hiring quotas, candidate credential composition, and vacancy duration 6 to 12 months post-intervention.
What to do
Encourage hiring managers to re-evaluate mandatory university degree requirements for entry-level professional positions when vacancy duration is high and applicant skill distributions overlap across educational tiers.
From the source
"Moreover, firms decrease their reservation quality for workers (shifting towards less-educated ones)... reduce the proportion of professional workers with degrees by about 7 percentage points... and report lower expectations of hiring workers for occupations that require higher educational levels."
Matching_Firms_and_Young_Jobseekers_through_a_Job_Fair_A_Field_Experiment.pdf