Decomposing Recruitment Elasticity in Job Matching

The wage elasticity of recruitment is a key indicator of employer market power in the labor market. This study estimates and decomposes this elasticity using data from Japan’s largest private job-matching intermediary. On average, our findings reveal that recruitment elasticity is not significantly different from zero. However, this average masks important heterogeneity: workers earning above the median wage exhibit positive elasticity, while those earning below the median show an insignificant but negative elasticity. Further analysis suggests that the negative elasticity among lower-wage workers stems from their reluctance to inquire about higher-wage vacancies. Additionally, we uncover several notable patterns: there are minimal systematic differences in elasticity between on-the-job and off-the-job searches; workers tend to choose similar job types and locations during the inquiry and application stages; and the matched wage is largely determined by the lower bound of the posted wage range.