OIT - Directed Search, Wages, and Non- Wage Amenities - Evidence from an Online Job Board

X Directed Search, Wages, and NonWage Amenities: Evidence from an Online Job Board Authors / Verónica Escudero, Hannah Liepmann, Damián Vergara

March / 2025 ILO Working Paper 136© International Labour Organization 2025 Attribution 4.0 International (CC BY 4.0) This work is licensed under the Creative Commons Attribution 4.0 International. See: https:// creativecommons.org/licenses/by/4.0/. The user is allowed to reuse, share (copy and redistribute), adapt (remix, transform and build upon the original work) as detailed in the licence. The user must clearly credit the ILO as the source of the material and indicate if changes were made to the original content. Use of the emblem, name and logo of the ILO is not permitted in connection with translations, adaptations or other derivative works. Attribution – The user must indicate if changes were made and must cite the work as follows: Escudero, V., Liepmann, H., Vergara, D. Directed Search, Wages, and Non-Wage Amenities: : Evidence from an Online Job Board. ILO Working Paper 136. Geneva: International Labour Office, 2025.© ILO. Translations – In case of a translation of this work, the following disclaimer must be added along with the attribution: This is a translation of a copyrighted work of the International Labour Organization (ILO). This translation has not been prepared, reviewed or endorsed by the ILO and should not be considered an official ILO translation. The ILO disclaims all responsibility for its content and accuracy. Responsibility rests solely with the author(s) of the translation. Adaptations – In case of an adaptation of this work, the following disclaimer must be added along with the attribution: This is an adaptation of a copyrighted work of the International Labour Organization (ILO). This adaptation has not been prepared, reviewed or endorsed by the ILO and should not be considered an official ILO adaptation. The ILO disclaims all responsibility for its content and accuracy. Responsibility rests solely with the author(s) of the adaptation.

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Authorization for publication: Richard Samans, Director, Research Department ILO Working Papers can be found at: www.ilo.org/global/publications/working-papers Suggested citation: Escudero, V., Liepmann, H., Vergara, D. 2025. Directed Search, Wages, and Non-Wage Amenities: : Evidence from an Online Job Board , ILO Working Paper 136 (Geneva, ILO). https://doi.

org/10.54394/YWML923801 ILO Working Paper 136 Abstract We leverage rich data from a prominent online job board in Uruguay to assess directed search patterns in job applications, focusing on posted wages and advertised non-wage amenities. We find robust evidence of directed search based on posted wages in the cross-section, with stark heterogeneity by occupation: the wage-application correlation is driven by vacancies attached to lower-skill occupations, with applications to vacancies attached to higher-skill occupations showing no responsiveness to posted wages. By applying text analysis to the job ads, we elicit advertised non-wage amenities and find evidence of directed search based on non-wage amenities. Applications to vacancies attached to lower-skill occupations are consistent with lexicographic application preferences: amenities predict applications to these vacancies only when wages are not posted. Finally, we exploit industry-by-occupation minimum wage variation to demonstrate that the observed occupational heterogeneity in directed search patterns is supported by quasi-experimental difference-in-differences estimates of the impact of wages on job applications.

application preferences: amenities predict applications to these vacancies only when wages are not posted. Finally, we exploit industry-by-occupation minimum wage variation to demonstrate that the observed occupational heterogeneity in directed search patterns is supported by quasi-experimental difference-in-differences estimates of the impact of wages on job applications.

JEL codes: E24, J31, J32, J62, J63

Keywords: Directed Search, Vacancies, Wages, Non-Wage Amenities, Minimum Wages About the authors Verónica Escudero joined the Research Department of the ILO in 2008 and today she is Chief of the Skills, ALMPs and Policy Evaluation Team. Between March 2021 and February 2023, she served as a Visiting Scholar with CEGA (Center for Effective Global Action) at the University of California Berkeley. She is a PhD specialized on labour and development economics and applied microeconomics. Her current research focuses on assessing the effectiveness of labour market and social policies on job quality and social conditions. More recently, she has been exploring topics related to the skills necessary to foster effective transitions to decent work with a focus on lowand middle-income countries, through the use of online data on vacancies and applications to labour portals. She holds a PhD in Economics from Paris School of Economics and the

École des Hautes Études en Sciences Sociales (EHESS). Hannah Liepmann joined the Research Department of the International Labour Organization in 2018, where she works as an Economist in the Skills, Active Labour Market Policies, and Policy Evaluation Team. As an empirical labour economist, she is particularly interested in studying how labour market and social protection policies as well as phenomena of structural change affect the integration of marginalized groups into quality employment. Hannah obtained her PhD in Economics from Humboldt-University Berlin and she is an IZA Research Fellow. Damián Vergara is an Assistant Professor in the Department of Economics at the University of Michigan with research interests in public and labor economics. In the 2023-2024 academic year, he was a Postdoctoral Research Associate at the Industrial Relations Section at Princeton

Damián Vergara is an Assistant Professor in the Department of Economics at the University of Michigan with research interests in public and labor economics. In the 2023-2024 academic year, he was a Postdoctoral Research Associate at the Industrial Relations Section at Princeton University. Vergara obtained a B.A. and an M.A. in Economics from the Universidad de Chile and a Ph.D. in Economics from UC Berkeley.02 ILO Working Paper 136 Abstract 01 About the authors 01 X Introduction 04 Related literature 07 Structure of the paper 08 X 1 General Context, Data, and Descriptive Statistics 09 1.1 General context 09 1.2 Data 09 1.3 Descriptive statistics 11 Vacancies 11 Applicants 12 Applications 12 Amenities 12 X 2 Cross-Sectional Facts on Job Applications 14 2.1 How diverse are application portfolios? 14 Number of applications 14 Diversity in applications 14 2.2 Cross-sectional patterns of directed search 17 Applications and wages 17 Occupational heterogeneity 18 Applicant-level heterogeneity 20 2.3 The role of non-wage amenities 21 Posted wages and amenities 21 Applications and amenities 23 Applicant-level heterogeneity 24 2.4 Summary of findings and discussion 26 X 3 The Causal Effect of Wages on Applications 27 3.1 Setting and data 27 Collective Bargaining Agreements 27 CBAs data 28 Economic significance of the minimum wage across occupations 29 3.2 Empirical strategy 29 Table of contents03 ILO Working Paper 136 Estimating equations 30 3.3 Application effects of the minimum wage 31 Robustness checks and within-vacancy design 32 Heterogeneity by applicant characteristics 33 3.4 Additional results 33 Vacancies and openings 33 Advertised non-wage amenities 33 Vacancy requirements 34 X Conclusions 35 References 36

Robustness checks and within-vacancy design 32 Heterogeneity by applicant characteristics 33 3.4 Additional results 33 Vacancies and openings 33 Advertised non-wage amenities 33 Vacancy requirements 34 X Conclusions 35 References 36 Figures and Tables 42

A. Methodology for Creating Variables from Free Text Entries 62

A.1 Skills 62 A.2 Occupations 64 A.3 Amenities 65

B. Additional Figures and Tables 70

Appendix Bibliography 93 Acknowledgements 9604 ILO Working Paper 136 X Introduction How responsive are job seekers to the characteristics of vacancies? Unpacking the “black box” of job applications informs about the presence of labor market frictions and helps to assess key assumptions in related theoretical work, for example, about random versus directed search, wage posting versus wage bargaining, or the role of non-wage amenities. Understanding the job application process is particularly relevant given recent documentation of imperfect information and beliefs in the labor market, from both workers and employers (Cullen, 2024; Jäger et al., 2024). Moreover, as argued by Holzer et al. (1991), job queuing behavior suggests the existence of ex-ante rents in the labor market. Hence, job seekers’ responses to changes in the characteristics of posted vacancies can shed light on the degree to which the documented industryand firm-level wage premia constitute evidence of rents in the labor market. Despite its importance, the empirical study of job applications is challenging because most datasets record equilibrium outcomes which, by definition, are only observed once the job application process is completed. To overcome this challenge, researchers have switched gears to gather direct information on the application process. Hall and Krueger (2012) and Krueger and Mueller (2016) pioneered using survey data on workers and job seekers. More recently, economists have started using vacancy-level data from private online job boards to better understand how firms advertise jobs and recruit workers and how job seekers search and make application decisions

(2016) pioneered using survey data on workers and job seekers. More recently, economists have started using vacancy-level data from private online job boards to better understand how firms advertise jobs and recruit workers and how job seekers search and make application decisions (e.g., Banfi and Villena-Roldan, 2019; Marinescu and Wolthoff, 2020; Skoda, 2022; Arnold et al., 2023; Batra et al., 2023). This paper builds on this latter literature and uses data from a large online job board in Uruguay to study directed search patterns in job applications (that is, the extent to which job seekers direct their search toward vacancies with specific attributes), focusing on the role of posted wages and advertised non-wage amenities. The data comes from BuscoJobs (BJ), a prominent online job search platform that operates in more than 30 countries. In Uruguay, BJ covers a broad set of industries and occupations and is estimated to contain around 60% of total online private sector vacancies in the country (Escudero et al., Forthcoming). We have access to data on vacancies, applicants, and applications for the period 2011-2020, which we link using unique identifiers of applicant profiles and vacancies. On top of the complete application portfolio, applicant profiles contain information on gender, age, employment status, employment histories, education, and training. Vacancies contain information on the number of positions they seek to fill, formal requirements, and firm and industry identifiers. Also, 20% of vacancies post a monthly wage. Important for our analysis, we have access to the full job ad text, which is processed using Natural Language Processing (NLP) techniques to elicit the following additional variables: the skills required by vacancies and the occupations vacancies seek to recruit (Escudero et al., Forthcoming); and the non-wage amenities advertised in the job post (Adamczyk et al., Forthcoming). The analysis proceeds in two parts. The first part develops a cross-sectional analysis that confirms and extends the main findings of Banfi and Villena-Roldan (2019) and Marinescu and Wolthoff

and the non-wage amenities advertised in the job post (Adamczyk et al., Forthcoming). The analysis proceeds in two parts. The first part develops a cross-sectional analysis that confirms and extends the main findings of Banfi and Villena-Roldan (2019) and Marinescu and Wolthoff (2020). The analysis shows that vacancies attached to lower-skill occupations receive more applications when they post higher wages or advertise non-wage amenities, however, there is a lexicographic application pattern as the effect of amenities on applications vanishes in the subset of vacancies that post a wage. On the contrary, applications to vacancies attached to higher-skill occupations do not react to posted wages but increase when non-wage amenities are advertised. The second part of the analysis leverages the fact that Uruguay implements Collective Bargaining Agreements (CBAs) that dictate and frequently adjust minimum wages, which vary at the industry-by-occupation level. We exploit this feature to complement the cross-sectional analysis with05 ILO Working Paper 136 causal differences-in-differences estimates of wage effects on job applications. We find that minimum wage hikes increase applications to vacancies attached to lower-skill occupations, with no effect on vacancies attached to higher-skill occupations. Hence, the occupational heterogeneity documented in the cross-section is corroborated in the quasi-experimental exercise. To preview our analysis in more detail, the cross-sectional analysis is structured in three exercises. First, we characterize application portfolios at the applicant level and explore whether they are diversified or concentrated in a few industries or occupations. We find substantial heterogeneity in the number of applications per job search spell across applicants. We also document that application portfolios are diversified. Job seekers who submit multiple applications in a given quarter rarely concentrate their applications within a specific industry and/or occupation. Instead, workers tend to apply for vacancies that span a wide range of industries and occupations. For example, when applicants submit 5 applications in a given quarter, their applications span, on average, 4.2 2-digit industries, 3.5 1-digit industries, and 2.8 1-digit occupations. This

tions. For example, when applicants submit 5 applications in a given quarter, their applications span, on average, 4.2 2-digit industries, 3.5 1-digit industries, and 2.8 1-digit occupations. This qualitative pattern remains consistent regardless of the number of applications made. This set of findings suggests that workers do not exhibit strong attachments to an occupation and, especially, an industry at the time of application, implying that they possibly consider other job attributes when choosing the vacancies they apply for, making directed search patterns feasible. The second cross-sectional exercise explicitly explores directed search based on posted wages. We first replicate Banfi and Villena-Roldan (2019) and Marinescu and Wolthoff (2020) main finding of a positive and significant correlation between posted wages and vacancy-level applications once appropriate skill controls (in our case, occupations) are included. The main contribution of this section, however, is to document a stark heterogeneity by occupation in the wage-application elasticity. We find that for vacancies attached to a subset of occupations, which we label as lower-skill occupations (clerical support, services and sales, plant and machine operators, and elementary occupations), the elasticity of applications to posted wages is large, significant, and highly robust to the inclusion of controls and sample selections. On the contrary, for the vacancies attached to the remaining occupations, which we label as higher-skill occupations (managers, professionals, technicians and associate professionals, and craft workers), the relationship between applications and posted wages is completely absent. This finding is consistent with wage posting being more prevalent in lower-skill occupations and wage bargaining and individual offer tailoring being more prevalent in higher-skill occupations (e.g., Hall and Krueger, 2012; Caldwell

and Harmon, 2019; Lachowska et al., 2022; Caldwell et al., 2024) since posted wages may provide different information for applicants depending on their occupation, thus mediating the application responsiveness. The documented heterogeneity is also consistent with recent evidence on employers being more likely to use aggregate information to set wages (that is, engage in “salary benchmarking”) when positions are attached to low-skill occupations (Cullen et al., 2024). In this exercise, we also take advantage of the applicant-level data and explore whether the responsiveness of applications to posted wages varies with applicant characteristics. Both a vacancy-level analysis and an application-level analysis show that applications made by male, employed, older, college-educated, and skilled job seekers are significantly more responsive to wages than applications made by female, unemployed, young, non-college-educated, and unskilled job seekers, respectively. We also find that applicants with presumably worse labor market prospects (female, unemployed, young, non-educated, and unskilled) display negative wage elasticities when applying to vacancies attached to higher-skill occupations. This finding is consistent with models of directed search where workers trade-off wages with job search spell length (e.g., Moen, 1997) and models with on-the-job search where worse outside options may encourage workers to apply to low-wage jobs to climb the job ladder in future job transitions (e.g., Burdett and Mortensen, 1998; Postel-Vinay and Robin, 2002a,b).06 ILO Working Paper 136 Finally, the third cross-sectional exercise assesses the role of non-wage amenities in the job application process. We provide a battery of correlational exercises that consistently show that advertised amenities matter for job seekers. Our analysis builds on five elicited non-wage amenities (bonuses and commissions, schedule flexibility, good work environment, working in teams, and possibilities for human capital development). We test for the effects of advertising at least one amenity and also explore multivariate regressions that include each amenity separately.

ties (bonuses and commissions, schedule flexibility, good work environment, working in teams, and possibilities for human capital development). We test for the effects of advertising at least one amenity and also explore multivariate regressions that include each amenity separately. We find that, on average, advertising amenities increase the volume of applications; however, the effect is very heterogeneous in size and sign across amenities, occupations (conditional on amenity), and applicant characteristics. In general, the relevance of non-wage amenities for job applications echoes the findings in Banfi and Villena-Roldan (2019), who show that applicants rely on job ad descriptions when no wages are posted. One novel result that emanates from this exercise is that we find robust evidence of lexicographic preferences for vacancies attached to lower-skill occupations. Amenities only increase applications to vacancies attached to lower-skill occupations when vacancies do not offer a posted wage, but the effect of amenities on applications vanishes when these vacancies post a wage. On the contrary, vacancies attached to higher-skill occupations show a positive effect of amenities on applications regardless of the wage-posting status. These findings can also be thought of as a consequence of the heterogeneous incidence of wage posting versus wage bargaining across skill levels. Under wage posting, the wage may be interpreted as a “sufficient statistic” for job attributes, giving job ads a secondary role conditional on the wage. This result is consistent with Belot et al. (2022), who show that applicants predict non-wage attributes based on the posted wage even when job ads are equal. For higher-skill occupations, however, the lack of information implicit in posted wages may provide a greater role to the advertised amenities. While informative, the cross-sectional analysis may be biased by omitted variables and selection on unobservables. The correlations between applications, wages, and amenities could be driven by vacancy (or firm) characteristics that are valued by workers but are unobserved by the econometrician. Moreover, as suggested by Skoda (2022), Arnold et al. (2023), and Batra et al. (2023),

on unobservables. The correlations between applications, wages, and amenities could be driven by vacancy (or firm) characteristics that are valued by workers but are unobserved by the econometrician. Moreover, as suggested by Skoda (2022), Arnold et al. (2023), and Batra et al. (2023), the sample of vacancies that decide to post a wage is possibly selected. In our setting, the distribution of industries and occupations is similar between vacancies that post and do not post wages. Still, the extent to which wage posting correlates with latent wages can affect the interpretation of the cross-sectional elasticities. In this context, the second part of the paper provides causal estimates of the effect of wages on applications by leveraging plausibly exogenous variation in minimum wages at the industry-by-occupation level. The objective of this exercise is to test whether the occupational heterogeneity in directed search documented in the cross-section is confirmed in a quasi-experimental framework, thus providing stronger grounds for its causal interpretation. In response to an economic crisis that deteriorated real wages, Uruguay implemented a set of labor market institutions in 2005, including wage councils that carried out periodic tripartite bargaining rounds (between workers, employers, and the government) at the industry level to define a range of minimum wages attached to different occupations specified in sectoral CBAs.1 These CBAs were gradually expanded, yielding almost complete industry coverage by 2010, and played an economically significant role across the different occupational groups we study. CBAs are heterogeneous across industries, both in terms of the minimum wage levels and the number of occupations that they cover. This diversity results in variation in minimum wages across 1 Wage councils were central actors in the Uruguayan economy until 1973 – when a dictatorship eliminated them – and, while they operated between 1985 and 1992 after the return to democracy, they were not binding between 1992 and 2005.07 ILO Working Paper 136

industries within specific occupations. While we cannot match each vacancy to the exact minimum wage set by the CBAs (as these agreements encompass occupations and industries that do not align directly with the classifications observed in our data), we exploit the heterogeneity in minimum wages by measuring exposure to minimum wage increases at the industry-by-occupation level after collapsing the variation present in the CBAs at the occupation and industry categories observed in the vacancy data. The variation in exposure to minimum wage increases, combined with the regularity of bargaining rounds (resulting in several minimum wage adjustments every 6 months), offers a natural source of variation to estimate the causal (intent-totreat) effects of wages on applications. We implement a stacked difference-in-differences (DID) design that compares, within each minimum wage adjustment window, the applications to vacancies in industry-by-occupation cells that are exposed to minimum wage increases to vacancies in industry-by-occupation cells that are not. This latter situation may arise either because the specific cell does not adjust the wage in a given semester or because certain occupations are not covered in certain contracts. We find that vacancies attached to lower-skill occupations in industry-by-occupation cells exposed to minimum wage increases face an increase in applications, while exposed vacancies attached to higher-skill occupations show no response to the policy change. That is, the quasi-experimental DID results confirm our cross-sectional finding of occupational heterogenitiy in directed search. The implied wage-application elasticity in vacancies attached to lower-skill occupations is around 1.5, which aligns with the empirical literature on labor supply elasticities (Sokolova and Sorensen, 2021). We also provide evidence that suggests that minimum wage increases generated no change in vacancies, openings, advertised non-wage amenities, or vacancy requirements. In the spirit of Holzer et al. (1991), the documented queuing for high-paying jobs in lower-skill occupations paired with the absence of changes in other margins suggests the presence of rents in the Uruguayan lower-skill labor market. Related literature This paper contributes to the growing empirical literature that uses online job board data to

occupations paired with the absence of changes in other margins suggests the presence of rents in the Uruguayan lower-skill labor market. Related literature This paper contributes to the growing empirical literature that uses online job board data to characterize empirical patterns in job applications, in particular, related to directed search behavior.2 The closest papers to ours are Banfi and Villena-Roldan (2019) and Marinescu and Wolthoff (2020) who use data from Chile and the United States, respectively, to document that, conditional on appropriate vacancy-level skill controls, vacancies that post higher wages receive more applications. We replicate this finding in the cross-section, document novel heterogeneities by vacancies’ occupation and applicants’ characteristics, and confirm the directed search pattern using quasi-experimental variation in minimum wages. Both papers also document that applicants use the information displayed in job titles and job ads to direct their search. We provide an interpretation of that behavior by eliciting advertised non-wage amenities from job ad texts and showing directed search based on amenities. While the aforementioned papers exclusively rely on cross-sectional variation in wages, another strand of literature has causally established directed search patterns using experimental variation in controlled settings (Dal Bó et al., 2013; Belot et al., 2022; He et al., 2023). Our quasi-experimental results based on minimum wage variation add to the causal estimates of directed search behavior.3 2 Online job board data has also been used to analyze the wage posting decision by firms and the effect of job transparency policies (Skoda, 2022; Arnold et al., 2023; Batra et al., 2023), job-specific skill requirements (Deming and Kahn, 2018; Hershbein and Kahn, 2018), and the role of information in job applications (Belot et al., 2019). 3 A related literature studies the link between vacancy duration and wages (Bassier et al., 2023; Mueller et al., 2023).08 ILO Working Paper 136 This paper also contributes to the literature on non-wage amenities and compensating differ3 A related literature studies the link between vacancy duration and wages (Bassier et al., 2023; Mueller et al., 2023).08 ILO Working Paper 136 This paper also contributes to the literature on non-wage amenities and compensating differentials. Recent structural analyses of the role of non-wage amenities in wage determination proceed by adding structure to a wage residual, usually giving form to an “amenity index” estimated from equilibrium data (e.g., Sorkin, 2018; Taber and Vejlin, 2020; Lamadon et al., 2022, 2024; Morchio and Moser, 2023; Roussille and Scuderi, 2024). To open the “black box” of amenities,