In the second half of the paper, we develop a model with a new mechanism to explain firms’ lack of wage posting. Firms do not include pay information as bargaining offers an insurance mechanism against not being able to hire profitably at the posted pay.

Why? Not because they don’t know which skills firms want. Rather, because job seekers in this context and other contexts have limited information about their own skills (two of my working papers provide evidence on this in Ethiopia and South Africa: docs.iza.org/dp17761.pdf, tinyurl.com/3wsydrv6).

2. Pay information does not increase sorting by skills as high wage salaries do not receive higher-quality applicants. So firms’ worries about under-qualified applicants do not bear out. However, there is also no positive assortative matching of applicants and vacancies.

1. Pay information increase the wage elasticity of application numbers. That is, relatively high-wage postings attract more applicants, while low-wage postings attract fewer. . ➡️ Job seekers use pay information to decide where to direct their applications.

We recruit a diverse set of 314 firms with a total of 447 vacancies who agree for us to randomize whether they job adverts include salary information. We then track all applications and screen applicants before forwarding applications to our partner firms. Key findings below:

This project was motivated by a stark fact: only !4%! of job adverts in Addis Ababa had any information about the provided pay. We ask firms why: 68% say want to avoid attracting under-qualified applicants and 41% want to negotiate salaries. Can we support this empirically?