Filling vacancies: an empirical analysis of the cost and benefit of search in the labour market

This paper investigates empirically the factors that affect the cost-benefit ratio of employers' search. The empirical analysis is based on a small Dutch data set containing individual information on filled vacancies. It is found that firms that use advertisements during recruitment are sensitive to labour market conditions; their search cost per applicant rises (drops) in tight (slack) labour markets because of the diminished ability of advertisements to generate applicants in tight labour markets. Furthermore, it is found that the high search cost incurred by posting identical vacancies is more than compensated for by the benefits from having a larger flow of applicants.