Estimating Vacancies from Firms’ Hiring behavior: The Case of a Developing Economy

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The series Working Papers on Economics is published by the Office for Economic Studies at the Banco de la República (Central Bank of Colombia). The works published are provisional, and their authors are fully responsible for the opinions expressed in them, as well as for possible mistakes. The opinions expressed herein are those of the authors and do not necessarily reflect the views of Banco de la República or its Board of Directors.

AUTHOR OR EDITOR
Leonardo Fabio Morales
José Lobo
Autores y/o editores

Vacancies are the center of any job creation process. In this paper, we study firms’ hiring behavior in a way that is directly related to vacancies. To understand the dynamic relationship between hires and vacancies, we estimate what we called a hiring function. Even though we cannot observe vacancies in our data, we propose an original procedure that allows recovering an estimate of vacancies. For this purpose we use firms’ standard information on hires and separations. Monte Carlo experiments show that the prediction of vacancies from this procedure is consistent. Using this prediction, we analyze the firm and aggregated level behavior of vacancies for the Colombian labor market. We find that 73% of all vacancies are created by large firms but, relatively, small firms create more new positions. The method we propose may be useful in developing economies, where there are no good sources of information on vacancies.          

  

The series Borradores de Economía is published by the Economic Studies Department at the Banco de la República (Central Bank of Colombia). The works published are provisional, and their authors are fully responsible for the opinions expressed in them, as well as for possible mistakes. The opinions expressed herein are those of the authors and do not necessarily reflect the views of Banco de la República or its Board of Directors.

 

Update 30/10/2017, 9:48 a. m.