Week 10

Question 1

Matching

Answer 1

Heterogeneous individuals are dynamically alligned with heterogeneous organisations and the many situation within them.
Can be described by match quality (P-O fit)

Question 2

Creation of matches

Answer 2

Firms use recruitment and hiring to attract future employees with the best potential or anticipated P-O fit.

Question 3

Rectruiting

Answer 3

Attracting a good enough pool of candidates among which you select a few of them

Question 4

Hiring

Answer 4

Selection of the actual people who are going to be hired

Question 5

Signaling

Answer 5

Ability to convey information which is credible only by using signals that are costly or otherwise difficult to fake

Question 6

Steps of RECRUITMENT

Answer 6

1. Bring a job opening to the attention of potential job candidates
2. Influence whether these individuals apply for the opening
3. Affect whether they maintain interest in the position until a job offer is extended
4. Influence whether a job offer is accepted

The shape of your network can be crucial for your probability of success in finding a job

Question 7

Behavioural assumptions

Answer 7

Bounded rationality : imperfect knowledge of alternatives + imperfect processing of information

Opportunism : both job seekers and firms have an interest in providing information strategically

Question 8

When will a separating equilibrium occur (signaling)

Answer 8

• When sufficiently strong correlation btw ability and
  the cost of education determines the spread btw the
  cost functions
• Predictive validity of education
  - education serves as a function of ability
• Pay level setting
  - W* too low = reduced incentives for high-ability
  employees to invest in education
  - W* too high = increased incentives for
  low-ability employees to invest in education

Question 9

CORRELATION COEFFICIENT

Answer 9

We calculate r
If r = 1 : perfect positive correlation
If r = -1 perfect negative correlation
In both cases the observations are on a positive (r = 1) or negative (r=-1) sloped straight line
If r = 0 there is no correlation and the observations can’t be meaningfully fitted by a line