Hiring difficulties and firms' growth

The paper is co-authored with Maddalena Ronchi and Julien Sauvagnat.

Abstract:
This paper studies the role of recruitment difficulties on firms' growth. We build granular measure of vacancies filling rates and time-to-fill by commuting zone X occupation X industry in France. Within a shift-share design, we then show that recruitment difficulties translate into fewer vacancies posted by firms employing workers in hard-to-recruit occupations. This hampers their employment, especially so in labor-intensive firms and when firms employ highly specific occupations. Investment, profits, and sales are in turn negatively impacted. We show that firms partially adjust to hiring difficulties by increasing wages, retaining incumbent workers, and promoting them higher up into high-pay occupations