I analyze labor market matching with search and informational frictions, by studying employer recruiting on college campuses. Based on employer and university interviews, I develop a model describing firms’ choice of target campuses. The model predicts that with costly screening, firms concentrate (per student) at selective universities over those where high-quality students are larger in number, but smaller in proportion. Further, recruiting is affected by nearby universities’ selectivity. This prediction has strong support using data from 39 finance and consulting firms and the Baccalaureate and Beyond. For median-selectivity universities, a better regionally-ranked university is twice as likely to attract a consulting firm, and wages are higher by 4%. Halving screening costs, for example through algorithmic screening, structural estimation shows a 27% increase in the proportion of expected hires from universities outside the top selectivity quartile.
- Employer recruiting
- Labor market search
- Return to university education
- Screening costs
ASJC Scopus subject areas
- Economics and Econometrics
- Organizational Behavior and Human Resource Management