Vacancy Durations and Entry Wages: Evidence from Linked Vacancy-Employer-Employee Data

A seminar on this subject will be held in Sölvhóll, a meeting room in the Central Bank of Iceland on 27 November at 15:00.

Speaker: Andreas Mueller, Professor of economics at Columbia University in New York

Abstract: Andreas will discuss the results of a paper co-written with Andreas Kettemann and Josef Zweimüller. In the paper, they explore the relationship between the duration of a vacancy and the starting wage of a new job, using unusually informative data comprising detailed information on vacancies, the establishments posting the vacancies and the workers eventually filling the vacancies. They find that vacancy durations are negatively correlated with the starting wage and that this negative association is particularly strong with the establishment component of the starting wage. Previous findings that growing establishments fill their vacancies faster are also confirmed. To understand the relationship between establishment growth, vacancy filling and entry wages, a model with directed search and ex-ante heterogeneous workers and firms is calibrated. They find a strong tension between matching the sharp increase in vacancy filling for growing firms and the response of vacancy filling to firm-level wages. The implications of this finding for aggregate labor market dynamics as well as potential resolutions of the tension in the model is discussed.