NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Opening the Black Box of the Matching Function: the Power of Words

Ioana Marinescu, Ronald Wolthoff

NBER Working Paper No. 22508
Issued in August 2016
NBER Program(s):Labor Studies

How do employers attract the right workers? How important are posted wages vs. other job characteristics? Using data from the leading job board CareerBuilder.com, we show that most vacancies do not post wages, and, for those that do, job titles explain more than 90% of the wage variance. Job titles also explain more than 80% of the across-vacancies variance in the education and experience of applicants. Finally, failing to control for job titles leads to a spurious negative elasticity of labor supply. Thus, our results uncover the previously undocumented power of words in the job matching process.

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Document Object Identifier (DOI): 10.3386/w22508

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