Working Paper: NBER ID: w21709
Authors: Mitchell Hoffman; Lisa B. Kahn; Danielle Li
Abstract: Job testing technologies enable firms to rely less on human judgement when making hiring decisions. Placing more weight on test scores may improve hiring decisions by reducing the influence of human bias or mistakes but may also lead firms to forgo the potentially valuable private information of their managers. We study the introduction of job testing across 15 firms employing low-skilled service sector workers. When faced with similar applicant pools, we find that managers who appear to hire against test recommendations end up with worse average hires. This suggests that managers often overrule test recommendations because they are biased or mistaken, not only because they have superior private information.
Keywords: job testing; hiring; managerial discretion; worker quality
JEL Codes: J24; M51
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| managerial bias (D91) | quicker job exits for workers hired against test recommendations (J63) |
| higher exception rates (C21) | worse hiring results (J79) |
| high exception rates (Y10) | diminished positive impacts of job testing on job duration (C41) |
| job testing (C99) | longer tenures for workers hired post-testing (J63) |