IDEAS home Printed from https://ideas.repec.org/p/arx/papers/2305.02587.html
   My bibliography  Save this paper

Employer Reputation and the Labor Market: Evidence from Glassdoor.com and Dice.com

Author

Listed:
  • Ke

    (Amy)

  • Ma
  • Sophie Yanying Sheng
  • Haitian Xie

Abstract

How does employer reputation affect the labor market? We investigate this question using a novel dataset combining reviews from Glassdoor.com and job applications data from Dice.com. Labor market institutions such as Glassdoor.com crowd-sources information about employers to alleviate information problems faced by workers when choosing an employer. Raw crowd-sourced employer ratings are rounded when displayed to job seekers. By exploiting the rounding threshold, we identify the causal impact of Glassdoor ratings using a regression discontinuity framework. We document the effects of such ratings on both the demand and supply sides of the labor market. We find that displayed employer reputation affects an employer's ability to attract workers, especially when the displayed rating is "sticky." Employers respond to having a rating above the rounding threshold by posting more new positions and re-activating more job postings. The effects are the strongest for private, smaller, and less established firms, suggesting that online reputation is a substitute for other types of reputation.

Suggested Citation

  • Ke & Ma & Sophie Yanying Sheng & Haitian Xie, 2023. "Employer Reputation and the Labor Market: Evidence from Glassdoor.com and Dice.com," Papers 2305.02587, arXiv.org, revised Sep 2023.
  • Handle: RePEc:arx:papers:2305.02587
    as

    Download full text from publisher

    File URL: http://arxiv.org/pdf/2305.02587
    File Function: Latest version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. François Derrien & Alexandre Garel & Arthur Petit-Romec & Jean-Philippe Weisskopf, 2020. "Online Reputation and Debt Capacity," Working Papers hal-02896691, HAL.
    2. Paul Resnick & Christopher Avery & Richard Zeckhauser, 1999. "The Market for Evaluations," American Economic Review, American Economic Association, vol. 89(3), pages 564-584, June.
    3. Lingfang (Ivy) Li & Steven Tadelis & Xiaolan Zhou, 2020. "Buying reputation as a signal of quality: Evidence from an online marketplace," RAND Journal of Economics, RAND Corporation, vol. 51(4), pages 965-988, December.
    4. Alexandre Mas & Amanda Pallais, 2017. "Valuing Alternative Work Arrangements," American Economic Review, American Economic Association, vol. 107(12), pages 3722-3759, December.
    5. Alan Benson & Aaron Sojourner & Akhmed Umyarov, 2020. "Can Reputation Discipline the Gig Economy? Experimental Evidence from an Online Labor Market," Management Science, INFORMS, vol. 66(5), pages 1802-1825, May.
    6. Rafael Rob & Arthur Fishman, 2005. "Is Bigger Better? Customer Base Expansion through Word-of-Mouth Reputation," Journal of Political Economy, University of Chicago Press, vol. 113(5), pages 1146-1175, October.
    7. Ioana Marinescu & Ronald Wolthoff, 2020. "Opening the Black Box of the Matching Function: The Power of Words," Journal of Labor Economics, University of Chicago Press, vol. 38(2), pages 535-568.
    8. Nicole Maestas & Kathleen J. Mullen & David Powell & Till von Wachter & Jeffrey B. Wenger, 2023. "The Value of Working Conditions in the United States and the Implications for the Structure of Wages," American Economic Review, American Economic Association, vol. 113(7), pages 2007-2047, July.
    9. Abhijit V. Banerjee & Esther Duflo, 2000. "Reputation Effects and the Limits of Contracting: A Study of the Indian Software Industry," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 115(3), pages 989-1017.
    10. Michael Anderson & Jeremy Magruder, 2012. "Learning from the Crowd: Regression Discontinuity Estimates of the Effects of an Online Review Database," Economic Journal, Royal Economic Society, vol. 122(563), pages 957-989, September.
    11. Simon Board & Moritz Meyer‐ter‐Vehn, 2013. "Reputation for Quality," Econometrica, Econometric Society, vol. 81(6), pages 2381-2462, November.
    12. David L. Deephouse & Suzanne M. Carter, 2005. "An Examination of Differences Between Organizational Legitimacy and Organizational Reputation," Journal of Management Studies, Wiley Blackwell, vol. 42(2), pages 329-360, March.
    13. Dellarocas, Chrysanthos, 2003. "The Digitization of Word-of-mouth: Promise and Challenges of Online Feedback Mechanisms," Working papers 4296-03, Massachusetts Institute of Technology (MIT), Sloan School of Management.
    14. Michal Kolesár & Christoph Rothe, 2018. "Inference in Regression Discontinuity Designs with a Discrete Running Variable," American Economic Review, American Economic Association, vol. 108(8), pages 2277-2304, August.
    15. Oyer, Paul & Schaefer, Scott, 2011. "Personnel Economics: Hiring and Incentives," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 20, pages 1769-1823, Elsevier.
    16. Derrien, François & Garel, Alexandre & Romec, Arthur & Weisskopf, Jean-Philippe, 2020. "Online Reputation and Debt Capacity," HEC Research Papers Series 1367, HEC Paris.
    17. Faberman, R. Jason & Menzio, Guido, 2018. "Evidence on the relationship between recruiting and the starting wage," Labour Economics, Elsevier, vol. 50(C), pages 67-79.
    18. Imke Reimers & Joel Waldfogel, 2021. "Digitization and Pre-purchase Information: The Causal and Welfare Impacts of Reviews and Crowd Ratings," American Economic Review, American Economic Association, vol. 111(6), pages 1944-1971, June.
    19. Michael Luca, 2011. "Reviews, Reputation, and Revenue: The Case of Yelp.com," Harvard Business School Working Papers 12-016, Harvard Business School, revised Mar 2016.
    20. Chrysanthos Dellarocas, 2003. "The Digitization of Word of Mouth: Promise and Challenges of Online Feedback Mechanisms," Management Science, INFORMS, vol. 49(10), pages 1407-1424, October.
    21. Guido Menzio, 2007. "A Theory of Partially Directed Search," Journal of Political Economy, University of Chicago Press, vol. 115(5), pages 748-769, October.
    22. Evan Magnusson, 2022. "Unboxing the Causal Effect of Ratings on Product Demand: Evidence from Wayfair.com," Journal of Industrial Economics, Wiley Blackwell, vol. 70(3), pages 525-564, September.
    23. Ginger Zhe Jin & Phillip Leslie, 2009. "Reputational Incentives for Restaurant Hygiene," American Economic Journal: Microeconomics, American Economic Association, vol. 1(1), pages 237-267, February.
    24. McCrary, Justin, 2008. "Manipulation of the running variable in the regression discontinuity design: A density test," Journal of Econometrics, Elsevier, vol. 142(2), pages 698-714, February.
    25. Steven Tadelis, 2002. "The Market for Reputations as an Incentive Mechanism," Journal of Political Economy, University of Chicago Press, vol. 110(4), pages 854-882, August.
    26. Sascha Raithel & Manfred Schwaiger, 2015. "The effects of corporate reputation perceptions of the general public on shareholder value," Strategic Management Journal, Wiley Blackwell, vol. 36(6), pages 945-956, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Michael Luca, 2011. "Reviews, Reputation, and Revenue: The Case of Yelp.com," Harvard Business School Working Papers 12-016, Harvard Business School, revised Mar 2016.
    2. Gesche, Tobias, 2018. "Reference Price Shifts and Customer Antagonism: Evidence from Reviews for Online Auctions," VfS Annual Conference 2018 (Freiburg, Breisgau): Digital Economy 181650, Verein für Socialpolitik / German Economic Association.
    3. Dominik Gutt & Jürgen Neumann & Steffen Zimmermann & Dennis Kundisch & Jianqing Chen, 2018. "Design of Review Systems - A Strategic Instrument to shape Online Review Behavior and Economic Outcomes," Working Papers Dissertations 42, Paderborn University, Faculty of Business Administration and Economics.
    4. Jason Sockin, 2022. "Show Me the Amenity: Are Higher-Paying Firms Better All Around?," CESifo Working Paper Series 9842, CESifo.
    5. Jolivet, Grégory & Jullien, Bruno & Postel-Vinay, Fabien, 2016. "Reputation and prices on the e-market: Evidence from a major French platform," International Journal of Industrial Organization, Elsevier, vol. 45(C), pages 59-75.
    6. Dominik Gutt, 2018. "In the Eye of the Beholder? Empirically Decomposing Different Economic Implications of the Online Rating Variance," Working Papers Dissertations 40, Paderborn University, Faculty of Business Administration and Economics.
    7. Quignon, Aurelien, 2023. "Crowd-based feedback and early-stage entrepreneurial performance: Evidence from a digital platform," Research Policy, Elsevier, vol. 52(7).
    8. Alan Benson & Aaron Sojourner & Akhmed Umyarov, 2020. "Can Reputation Discipline the Gig Economy? Experimental Evidence from an Online Labor Market," Management Science, INFORMS, vol. 66(5), pages 1802-1825, May.
    9. Annika Veh & Markus Göbel & Rick Vogel, 2019. "Corporate reputation in management research: a review of the literature and assessment of the concept," Business Research, Springer;German Academic Association for Business Research, vol. 12(2), pages 315-353, December.
    10. Michael Luca & Oren Reshef, 2021. "The Effect of Price on Firm Reputation," Management Science, INFORMS, vol. 67(7), pages 4408-4419, July.
    11. Hoyer, B. & van Straaten, D., 2022. "Anonymity and self-expression in online rating systems—An experimental analysis," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 98(C).
    12. Michael Luca & Oren Reshef, 2020. "The Effect of Price on Firm Reputation," NBER Working Papers 27405, National Bureau of Economic Research, Inc.
    13. Hui, Xiang & Klein, Tobias & Stahl, Konrad, 2022. "Learning from Online Ratings," CEPR Discussion Papers 17006, C.E.P.R. Discussion Papers.
    14. Edgardo Arturo Ayala Gaytán, 2009. "Social network externalities and price dispersion in online markets," Ensayos Revista de Economia, Universidad Autonoma de Nuevo Leon, Facultad de Economia, vol. 0(2), pages 1-28, November.
    15. Tobias Gesche, 2022. "Reference‐price shifts and customer antagonism: Evidence from reviews for online auctions," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 31(3), pages 558-578, August.
    16. Gary E. Bolton & Elena Katok & Axel Ockenfels, 2004. "How Effective Are Electronic Reputation Mechanisms? An Experimental Investigation," Management Science, INFORMS, vol. 50(11), pages 1587-1602, November.
    17. Rockenbach, Bettina & Sadrieh, Abdolkarim, 2012. "Sharing information," Journal of Economic Behavior & Organization, Elsevier, vol. 81(2), pages 689-698.
    18. Britta Hoyer & Dirk van Straaten, 2021. "Anonymity and Self-Expression in Online Rating Systems - An Experimental Analysis," Working Papers Dissertations 70, Paderborn University, Faculty of Business Administration and Economics.
    19. Jie Bai, 2016. "Melons as Lemons: Asymmetric Information, Consumer Learning and Seller Reputation," Natural Field Experiments 00540, The Field Experiments Website.
    20. W. Bentley MacLeod, 2006. "Reputations, Relationships and the Enforcement of Incomplete Contracts," CESifo Working Paper Series 1730, CESifo.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:arx:papers:2305.02587. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: arXiv administrators (email available below). General contact details of provider: http://arxiv.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.