Search, Hiring Strategies, and Labor Market Intermediaries.

Abstract

Labor-market intermediaries play an important role in turnover in many labor markets. This paper analyzes one class of such intermediaries, namely, search firms. The authors first model the hiring decision of the firm in both succession and replacement planning. They show that employers will, in equilibrium, use search firms to find new hires even where the search firms have no technological advantage in search. This can be interpreted as being due to the search firms' ability to diversify away sampling risk. Copyright 1987 by University of Chicago Press.