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Field
Trial Title
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Before
Matching Inefficiency, Recruitment Agencies, and Hiring in Addis Ababa, Ethiopia
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After
Employment Agencies and Hiring Frictions in Addis Ababa, Ethiopia
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Field
Abstract
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Before
High unemployment and high turnover are the two major issues in the urban context of developing countries, yet little is understood on what prevents firms from employing workers for longer. This project examines one specific matching inefficiency: firms tend to “poach” job applicants with other competing offers. When a vacancy meets many applicants, firms may interview or give an offer to the applicant with the highest productivity at the cost of workers' lower acceptance probability, while decreasing the chance of other firms matching with the same worker, a negative externality that causes too few matches. A new professional hiring service, recruitment agencies, has the potential to address this matching inefficiency. Facing multiple hiring requests at the same time, recruitment agencies maximize the total match surpluses from multiple firms, thus partially internalizing the externality. To understand the effect of recruitment agencies on firms' matching inefficiency, I propose to sample 1,000 small and medium formal firms in Addis Ababa, Ethiopia, who are planning to post a vacancy. For each vacancy, I will first construct a novel dataset on applicants’ details and firms’ action on each applicant. Then, I will randomly select 300 firms and match them with a recruitment agency in Addis Ababa; the agency will recommend a qualified worker for firms' interview directly. To control for the possibility that recruitment agencies may introduce new labor pool, I will randomly select another 300 firms, match them with the same set of recruitment agencies, but the workers recommended by the agencies will still go through firms' existing selection process. Enumerators will conduct follow-up surveys in 1 month and 3 months to collect matching details and hiring outcomes, particularly, whether treated firms interview fewer over-qualified applicants, are more likely to fill in the vacancy, and the new hires are less likely to quit.
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After
Private firms in developing countries face many hiring frictions. Increasingly, firms use employment agencies to find professional workers. How may employment agencies improve firms’ hiring outcomes? We focus on a new type of employment agencies in Ethiopia who match skilled labor to professional jobs. We sample 800 private firms with a job vacancy, and randomly match an employment agency to half of the vacancies to provide an extra applicant. Enumerators will conduct the first follow-up survey one month after to collect details of applicants and employers' perceptions of workers' productivity and outside options. Enumerators will conduct the second follow-up five months after to collect match quality outcomes for the hired workers.
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Last Published
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Before
April 14, 2022 11:55 AM
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After
February 13, 2023 06:02 PM
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Primary Outcomes (End Points)
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Before
For each vacancy: whether the vacancy is filled out within 1 month or 3 months, whether the new hire still stays in the firm after 3 months, the performance evaluation by new hire's immediate supervisor compared to other workers on the similar position.
For each applicant for the vacancy: education level, experience in the similar field, whether the applicant is invited to the interview, whether the applicant shows up for the interview, whether the applicant passes the interview, whether the applicant receives an offer, whether the applicant accepts the offer, number of outside offers, average salary of the outside offers.
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After
Match success rate: Whether employer hires at least one worker within 1 month, whether employer hires at least one worker recommended from the employment agencies/not from the employment agencies.
Match quality: Whether the hired worker quits voluntarily after 5 months, whether the hired worker is considered more productive, whether the hired workers exert more effort on the job.
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Experimental Design (Public)
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Before
Both treatment arms are firm-level.
Control: 400 firms
Treatment 1: 300 firms will be matched with a recruitment agency in Addis Ababa. The recruitment agency will recommend a qualified worker directly for the interview.
Treatment 2: 300 firms will be matched with a recruitment agency in Addis Ababa. The recruitment agency will recommend a qualified worker for the vacancy, but this worker will go through firms' existing selection process before interview.
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After
Control: 400 firms
Treatment: 400 firms will be matched with a recruitment agency in Addis Ababa. The recruitment agency will recommend a qualified worker in addition to the existing applicant pool.
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Randomization Unit
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Before
The treatment will be clustered by business blocks.
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After
The treatment will be clustered by business areas.
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Planned Number of Clusters
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100 business blocks
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After
80 business areas
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Planned Number of Observations
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1,000 firms
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After
800 firms
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Sample size (or number of clusters) by treatment arms
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Before
40 business blocks control, 30 business blocks in treatment 1, 30 business blocks in treatment 2.
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After
40 business areas in control, 40 business areas in treatment
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Field
Secondary Outcomes (End Points)
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Before
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After
Mechanism: The percentage of all applicants/skilled applicants considered high productivity, the percentage of all applicants/skilled applicants considered low outside options, whether the employer hires any applicant/skilled applicant perceived with high productivity, whether the employer hires any applicant/skilled applicant perceived with low outside options, whether the employer hires at least one worker and decreases negotiated salary
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