A Labor Markets Research Agenda through a Job Search Platform

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This research will use modern economic theory and experimental methods to study how information flows affect the functioning of labor markets, especially in low income communities. Specifically, this research study whether providing accurate labor market information to both employers and job seekers leads employers to make better employment decisions and therefore increase hiring and whether the accurate information encourages workers to be truthful about their qualifications when applying for jobs as well as encourage them to invest in improving their skills. Research on the effects of information flows on labor markets have either focused on the demand side (employers) alone or on the supply side (the workers). This innovative research project looks at how information flows affect both the employer (demand) and the supplier (job seeker) in the labor market. It thus provides a more complete view of how information flows affect the functioning of labor markets. In addition to its contribution to the economics literature and education, the results of this research project will guide policies to improve the functioning of labor markets, increase employment, human capital formation, economic growth, and ultimately reduce poverty. This research project will also help establish the US as the global leader in efficient labor markets.Information frictions in labor markets can lead firms and workers to make suboptimal matching decisions, lower employment, output, and wages while increasing costly turnover. Information frictions can also lead workers to make suboptimal human capital investments. This research will use a series of RCTs to test if alleviating information frictions can change job search and hiring behavior, improve firm-worker matching, and increase human capital investment. The project will build on a labor market search and hiring platform that was developed using prior NSF support that generates rich, high-frequency data on labor supply and demand. This project will use the platform to study the effects of actual and threatened audits of applicants’ work experience on applicants’ reporting of past work experience, job search, and investment in human capital, firms' hiring decisions; and firm-applicant match quality. The use of audits to capture both supply and demand side responses to labor market information frictions as well as the effects of these frictions on human capital formation is an innovation in the study of labor markets. The results of this research will significantly contribute to the economics literature on understanding the role of information flows in efficient functioning of labor markets as well as provide inputs into policies to improve the functioning of labor markets. The results of this research could increase investment in human capital, improve matching in labor market, hence employment, wages, incomes, and economic growth.This award reflects NSF's statutory mission and has been deemed worthy of support through evaluation using the Foundation's intellectual merit and broader impacts review criteria.