Search

We provide new empirical evidence on the magnitude and determinants of a firm’s hiring costs when filling a vacancy for skilled workers. In Switzerland, the average hiring costs amount to about 16 weeks of wage payments. The main components of hiring costs are post-match hiring costs, resulting from the initial low productivity and formal training needed for a new hire (53%), and disruption costs, resulting from the informal instruction of a new hire (26%). Pre-match hiring costs (i.e., search costs) account for just 21% of a firm’s hiring costs. Moreover, we find that search costs are positively associated with labor market tightness (i.e., the v/u ratio), both in the cross-section and over time. Our results will help to calibrate the hiring cost parameter in search models.

In this paper we analyze the training behavior of firms in Germany and Switzerland — two countries with a comparable apprenticeship system but strong differences in the regulation of their respective labor markets. We make use of two representative firm-level surveys on the provision of apprenticeship training to analyze differences in the costs and benefits of training and the firm's training decision. Our results suggest that firms are more likely to make a substantial (short-term) net investment in apprenticeship training in the presence of strong employment protection laws.