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Institutional arrangements and the labor market functioning: The case of executive search

Author

Listed:
  • Jérôme Gautié
  • Olivier Godechot

    (Sciences Po - Sciences Po)

  • Pierre-Emmanuel Sorignet

Abstract

Do headhunters firms improve the matching process, and therefore contribute to the efficiency of the labor market of top executives? Far from being a passive vector, on one hand they contribute to shape companies' specific demand; on the other hand, they initiate the supply of candidates resorting to their networks. Headhunters implement idiosyncratic categories of evaluation in order to fit as well as possible both parties' preferences. If such a type of transaction reduces information costs, it nevertheless produces distortions with regard to the market efficiency. It introduces a bias in favor of mobility between identical jobs (in terms of occupation and industry) and therefore participates to the labor market segmentation, which impedes substitution mechanisms. As a consequence, they contribute to the inflationary pressures that characterize the top executives' labor market.

Suggested Citation

  • Jérôme Gautié & Olivier Godechot & Pierre-Emmanuel Sorignet, 2021. "Institutional arrangements and the labor market functioning: The case of executive search," Post-Print hal-03349807, HAL.
    • Handle: RePEc:hal:journl:hal-03349807
    Note: View the original document on HAL open archive server: https://hal.science/hal-03349807
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    References listed on IDEAS

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    1. George J. Stigler, 1962. "Information in the Labor Market," NBER Chapters, in: Investment in Human Beings, pages 94-105, National Bureau of Economic Research, Inc.
    2. O. Ashenfelter & D. Card (ed.), 1999. "Handbook of Labor Economics," Handbook of Labor Economics, Elsevier, edition 1, volume 3, number 3.
    3. Blau, Francine D. & Kahn, Lawrence M., 1999. "Institutions and laws in the labor market," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 25, pages 1399-1461, Elsevier.
    4. Michael Spence, 1973. "Job Market Signaling," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 87(3), pages 355-374.
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