Why Still Vacant? Different Dynamics between Vacancy and Recruiting Intensity from the Impact of the Uncertainty Shocks

Abstract

This paper addresses a puzzling observation of the sluggish recovery pace of recruiting intensity compared to vacancies after the Great Recession. I hypothesize two economic elements to explain the observation: (i) the realistic features of the recruiting process and (ii) the impact of uncertainty shocks. By postulating the recruiting process as a sequential procedure of vacancy creation as a plan and recruiting intensity as an action, hence, positing vacancy as a state variable, this paper allows for reactions from the impact of the uncertainty shocks which differ from conventional reactions. Using vector autoregression, I show that there are statistically significant responses of recruiting intensity from the uncertainty shock while not for vacancy. Also, by constructing a dynamic stochastic general equilibrium model with a generalized search and matching framework, I show that there are larger negative responses in recruiting intensity compared to vacancy from the impact of second-order shocks.