Do Employers Respond to the Costs of Continued Search?

An analysis of US and Slovenian vacancy data sets reveals that an employer who is searching to fill a job vacancy is more likely to fill the vacancy by hiring an under-qualified worker when the search costs are higher; when, at the start of the search, the employer has less time to search at low cost; and during the week following an increase in search costs. These are interesting findings not only about the effects of search costs on employers' hiring decisions, but also because they suggest that search frictions in the two labour markets may be considerable. Copyright (c) Blackwell Publishing Ltd and the Department of Economics, University of Oxford, 2009.