Hunting for Talent: Firm-driven Labor Market Search in the United States
Abstract: Research suggests that increased digitization of the labor market, combined with the changing demand for skill, has altered the job-search process. This article argues that these changes have led to increased investments in firm-driven search for talent (or `outbound recruiting'). We investigate this question by proposing a two-sector labor market model and using two data sets, one new, to corroborate our predictions. First, we conduct a nationally representative survey of over 13,000 American workers. We find that nearly 18 percent of all employed workers in the US were hired into their present company by their employer's outbound recruiting effort, a substantial increase over the 4.2 percent observed in prior surveys. Using a post-COVID survey, we find similar results. Moreover, the share of hiring driven by firm-driven search is greatest among higher-income workers, at 20.3 percent, and those with STEM and business degrees, at 20 percent. Considerable regional variation also exists with over a quarter of Silicon Valley workers hired in this manner, but only 14.5 percent of those in Rochester. Second, we complement our worker-level results by analyzing 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---hiring more recruiters with skill in online search. Given the growth of this practice, we discuss implications for research on firm strategy and labor markets.
