Recruiting Talent
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ID: 326234
2026
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Abstract
Abstract We study a parsimonious model of a competitive labor market in which firms privately screen workers to identify talent. The equilibrium exhibits dispersion in wages and productivity; when talent is scarce, firms with superior screening skills post higher wages, attract better applicants, and recruit more talented workers. High-wage firms impose a compositional externality on low-wage firms, leading to equilibrium inefficiency: Welfare would be higher if low-skilled firms posted high wages and selected first. We also provide a micro-foundation for firms heterogeneous screening skills. When talented workers are better at screening (e.g. via superior referrals), a dynamic version of the economy converges to a unique steady state in which differences in talent, profits and screening skills persist forever.
| Reference Key |
openalex_W7204011459
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|---|---|
| Authors | Simon Board, Moritz Meyer-ter-Vehn, Tomasz Sadzik |
| Journal | The Review of Economic Studies |
| Year | 2026 |
| DOI |
10.1093/restud/rdag091
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| URL | |
| Keywords | Keywords not found |
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