Original source
Matching Frictions and Distorted Beliefs: Evidence from a Job Fair Experiment (2022)
working paper
Search for this source ↗Permission for School’s use is unestablished.
Used in these cards
Belief Entrenchment Cost of Search Frictions
"This suggests that, beyond slowing down matching, search frictions have a second understudied cost: they entrench inaccurate beliefs, further distorting search strategies and labour-market outcomes."
Dual-Sided Over-Optimism in Labor Market Fundamentals
"Overall, almost 75% of firms overestimate the ability of tertiary-educated jobseekers and about 90% of them overestimate the ability premium associated with tertiary education."
Educational Heterogeneity in Information Frictions
"The effects on jobseekers are concentrated among those without tertiary education, whose employment prospects improve significantly as a result (permanent employment rates double and formal employment rates increase by almost 50 percent)."
Experience-Based Recruitment Bottleneck
"The most common reason firms report for not hiring more at the fair is 'insufficient work experience' (34% of firms)... half of the jobseekers think that no previous work experience is required for securing a high-skilled job."
Gale-Shapley Algorithmic Match Recommendation
"Algorithmic recommendations are also shown to have a strong predictive power: matches suggested by our algorithm are about 200 percent more likely take place than non-suggested matches."
Observability Gradient in Labor Market Beliefs
"This suggests that while market participants value and acquire relevant publicly available information, the natural interaction between firms and young jobseekers in the labour market is insufficient for participants to learn key parameters of the matching process that are observed through direct interactions."
Sobering Belief Shock
"The intervention generates few hires, but it lowers participants' expectations and causes both firms and workers to invest more in search as predicted by a theoretical model; this improves employment outcomes for less educated jobseekers."
Unsafe Search Regime
"In this regime, for sufficiently low $\mu$, the decrease in $\mu$ causes an increase in search expenditure. Given the relatively high cost of not filling the position ($\kappa \gg 0$)... the pessimism shock makes the firm search more intensely."