Opening the Black Box of the Matching Function: The Power of Words.

How do employers attract the right workers? How important are posted wages vs. other job characteristics? Using data from the leading job board CareerBuilder.com, this paper shows that most vacancies do not post wages and, for those that do, job titles explain more than 90% of the wage variance. Job titles also explain more than 80% of the across-vacancies variance in the education and experience of applicants. Finally, failing to control for job titles leads to a spurious negative elasticity of labour supply. Thus, results of this paper uncover the previously undocumented power of words in the job matching process. [Working Paper 22508]