Hunting for talent: Firm-driven labor market search in America

(with Ines Black and Rembrand Koning)

What impact has the digitization of the labor market had on firm-driven search for talent? We investigate this question with two novel data sets. First, we conduct a nationally representative survey of American workers. We find that today over 18 percent of all employed workers in the US were hired into their present company by the outbound recruiting effort their employer, either directly or through labor market intermediaries such as a headhunter. The share of hiring driven by active firm search behavior is greatest among higher-income workers, at 23 percent, and those with STEM and business degrees, at 22.5 percent. Moreover, there is considerable regional variation. Over a quarter of Silicon Valley workers are hired in this manner. We complement our worker-level results with an analysis of a large sample of job postings in the US economy over the past decade. We find that firms, especially those relying on high-skilled labor, are increasingly developing capabilities to better hunt for talent. Given the prevalence of this practice, we discuss how theories of labor markets and firm strategy may be refined to account for these facts.