Scandinavian Working Papers in Economics

Discussion Paper Series in Economics,
Norwegian School of Economics, Department of Economics

No 20/2023: What Makes Hiring Difficult? Evidence from Linked Survey-Administrative Data

Antoine Bertheau (), Birthe Larsen and Zeyu Zhao
Additional contact information
Antoine Bertheau: Dept. of Economics, Norwegian School of Economics and Business Administration, Postal: NHH, Department of Economics, Helleveien 30, N-5045 Bergen, Norway
Birthe Larsen: Copenhagen Business School
Zeyu Zhao: University of Copenhagen

Abstract: We designed an innovative survey of firms and linked it to Danish administrative data to yield new insights about the factors that can influence firms’ hiring decisions. Several important findings stand out: (1) search and training frictions and economic uncertainty are as important as labor costs in hiring decisions ; (2) search and training frictions are more likely to affect younger and smaller firms; (3) uncertainty is more likely to affect hiring decisions in low-productivity firms; (4) thirty percent of firms prefer to hire already employed persons over the unemployed, because they believe that unemployed workers have lower abilities due to negative selection or skill depreciation during unemployment; and (5) these firms are more likely to report that labor market frictions and labor costs considerations discourage them from hiring.

Keywords: Hiring

JEL-codes: J20; J21

Language: English

69 pages, December 5, 2023

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