We study how search frictions in the labor market affect firms’ ability to recruit talented workers. In a field experiment in Ethiopia, we show that an employer can attract more talented applicants by offering a small monetary incentive for making a job application. Estimates from a structural model suggest that the intervention is effective because the cost of making a job application is large, and positively correlated with jobseeker ability. We provide evidence that this positive correlation is driven by dynamic selection. In a second experiment, we show that local recruiters underestimate the positive impacts of application incentives.
That is from a new AER piece by Girum Abebe, A. Stefano Caria, and Esteban Ortiz-Ospina. I find this claim very interesting, though not completely general. You will note these results are for clerical positions in Ethiopia, and note further “The impact of ability of application incentives is driven by women, and by those jobseekers who are currently unemployed and less-experienced.” It is possible that the ease of application improves the applicant pool for those with a confidence gap, yet who are talented nonetheless. I might add that the easy nature of the Emergent Ventures application (it really doesn’t take long and requires no reference letters or vita) reflects a similar logic.
In the context of this study, it is not just that some of the higher quality candidates apply for the money, rather the money is also a signal that the application process truly is open. Otherwise why pay for applicants?
That said, for jobs or awards that are more creative than just clerical labor, you want to give each application close scrutiny and that may militate against encouraging more and more applicants. You might even want “knowing to apply in the first place” to be the biggest test standing before the final prize. What better way to test for networks?
So the mix of “hard to know about at all, easy to apply once you do” will in fact fit some situations fairly well.