Working Paper: NBER ID: w18917
Authors: Amanda Pallais
Abstract: Hiring inexperienced workers generates information about their abilities. If this information is public, workers obtain its benefits. If workers cannot compensate firms for hiring them, firms will hire too few inexperienced workers. I determine the effects of hiring workers and revealing more information about their abilities through a field experiment in an online marketplace. I hired 952 randomly-selected workers, giving them either detailed or coarse public evaluations. Both hiring workers and providing more detailed evaluations substantially improved workers' subsequent employment outcomes. Under plausible assumptions, the experiment's market-level benefits exceeded its cost, suggesting that some experimental workers had been inefficiently unemployed.
Keywords: Entry-Level Labor Markets; Hiring; Field Experiment
JEL Codes: J01; J20; J60
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Hiring inexperienced workers (J68) | Subsequent employment outcomes (J68) |
| Providing detailed evaluations (H43) | Workers' earnings (J31) |
| Providing detailed evaluations (H43) | Market perceptions of worker abilities (J29) |
| Hiring inexperienced workers (J68) | Market-level employment and welfare (J68) |
| Providing detailed evaluations (H43) | Better hiring decisions (M51) |