Hiring in a Hobbesian World

Abstract

Although economic theory and employers blame youths' labor market problems on skill and work habit deficiencies, hiring employers do not use information related to these attributes. To explore this discrepancy, the authors interviewed a sample of 51 employers about the information they use in hiring entry-level workers. They found that employers have much available information but mistrust information from most sources. This mistrust explains their strong emphasis on impressions in interviews, a method that has been shown to give invalid (and biased) results, which often results in their selecting unproductive workers. The authors also found that some employers overcome the problem of mistrusted information in two ways: using information from their own workers and from long-term social networks. Although economic theory assumes that labor markets respond to all sources of information, these results suggest that employers use only information received in a social context that ensures its trustworthiness.