September 2015

IZA DP No. 9363: Ten Facts You Need To Know About Hiring

published as "Hiring costs and labor market tightness" in: Labour Economics, 2018, 52, 122-131.

We provide new empirical evidence regarding the magnitude and the determinants of a firm's costs required to fill a vacancy. The average costs required to fill a vacancy for a skilled worker in Switzerland amount to about 16 weeks of wage payments. The main components of the vacancy costs are initially low productivity, the formal instruction of a new hire (53 percent), disruption costs due to informal instruction of new hires (26 percent), and search costs (21 percent). Furthermore, hiring costs for small firms are associated with labor market tightness (i.e., the vacancy-unemployment ratio).