Doctoral Dissertation Research in Economics: Worth the Effort: Measuring and Predicting Investment in a Costly Application Process

Before firms can hire workers from a pool of applicants, they must attract the right candidates to apply for the job in the first place. On the worker’s side, applying for a job takes time and effort, and (in states where this is legal) sometimes even costs money. While these costs are guaranteed, the desired outcome of an application (a job offer) is usually not; so workers must weigh the real, present cost against the expected future benefit of applying.

This project frames applying for a job as a type of investment, and studies how the factors that influence a person’s investment decisions -- such as their willingness to take risks, or how optimistic they are about future returns -- might also affect the decision to apply for a job. Firms might think they are attracting all the best candidates for the job when they are actually discouraging suitable candidates who think applying is too risky or not worth their time (for reasons that have nothing to do with the candidate’s talents and skills).

For example, research shows that women on average are less willing to take risks than men are. This implies that, when the outcome of a job application is uncertain or the likelihood of being selected is low, women would be less likely than men to “invest” in the application process, especially if that process is very costly. This project experimentally tests whether changing the cost of applying for a job affects who decides to apply, and whether factors such as gender, willingness to take risks, and the nature of the job affect the degree to which someone gets discouraged by a high application cost.

The data gathered from this project should help firms improve their hiring processes to attract the best candidates and reduce unintentional discrimination. This evidence could also be used in other contexts where applications (and application costs) are common, such as higher education.

The primary goal of this project is to study how characteristics ostensibly unrelated to on-the-job productivity affect an individual’s willingness to pay an application cost. The project is designed around an experiment in which participants will face random variation in the cost of applying to complete a task for payment. Multiple types of tasks will be offered to subjects.

Some subjects will face only a minimal effort cost to apply, while others will face either a higher effort cost or a monetary cost. Any subjects who apply for a task will be asked to bet on their own likelihood of receiving an offer, in order to elicit their expectations. All subjects, regardless of application decisions, will be surveyed on their skills, their beliefs and tastes, and identity characteristics such as gender.

The researchers will use the data gathered on which participants applied for which tasks to estimate a probability model of the decision to apply for a job. This model will incorporate the type of task, the nature and magnitude of the application cost, and observable individual characteristics. A separate group of participants will be asked to review applications and select individuals they see as most likely to succeed in the task(s) they applied for, and then the selected applicants will be contacted to complete the task.

This second part of the project is designed to test whether changing the nature of an application cost affects the distribution of applicants or a recruiter’s ability to identify the best candidates for a job. Overall, the project aims to contribute to the job search literature by experimentally testing several explanations for why equally qualified candidates may not sort identically across job opportunities.

This award reflects NSF's statutory mission and has been deemed worthy of support through evaluation using the Foundation's intellectual merit and broader impacts review criteria.