This paper studies the role of hiring frictions on firms' growth. We leverage unique vacancy-level data matched to employer-employee datasets and to firm-level balance-sheet data within a shift-share design. We build granular shift measures of vacancies' success rates and time-to-fill by commuting zone X occupation X industry in France. Exploiting cross-firm exposure to those shifts, we show that recruitment difficulties translate into fewer vacancies posted by firms employing workers in hard-to-recruit occupations. This hampers their employment, especially so in labor-intensive firms and when firms employ highly specific occupations. Investment, profits, and sales are in turn negatively impacted. The effects are stronger when recruitment time shocks are driven by mismatch shocks rather than tightness shocks. We show that firms partially adjust to hiring difficulties by increasing wages, retaining incumbent workers, and promoting them higher up into high-pay occupations.
PaperLink (coming soon)
If you would like to be added to the distribution list or for further details regarding this seminar, please contact Daniel Waldinger at email@example.com
Applied Microeconomics Seminar Series