Financial incentives for job applicants can help firms attract high-quality candidates and also encourage those from disadvantaged backgrounds to apply
Read “The Selection of Talent: Experimental and Structural Evidence from Ethiopia” by Girum Abebe, Stefano Caria, and Esteban Ortiz-Ospina here.
When faced with onerous procedures to apply for a job, potential applicants can be expected to weigh the costs of applying on their time and energy against the probability of their getting the job and the eventual benefits. It is widely believed that if recruiters raise the costs of applying for a job, only the most suited and driven candidates can be expected to apply. In this VoxDevTalk, Stefano Caria shares insights from his paper with Girum Abebe and Esteban Ortiz-Ospina, in which the authors start from the assumption that the cost of applying for a job may be higher for the best applicants. Through their field experiment in Ethiopia, they find that employers find better applicants when they reimburse the applicants for submitting their application and appearing for the selection test. Moreover, they are also able to find high-quality candidates from relatively disadvantaged backgrounds who would have been otherwise deterred by the costs of applying.