Effect of the candidates' level of education on firms' hiring strategies

The present project aims at presenting the partial equilibrium of a modeled positive theory which describes the tradeoff the firms face in the hiring processes for vacancies that do not require high or specific level of education between the expected productivity and quitting rates of the candidates subject to their level of education. The basis of the theory is a performed experiment, by sector and geographically limited, to 20 retail and restoration firms in Catalonia and to 5 temporary employment agencies. The results lead to the affirmation that the hiring strategies used by the surveyed firms are, in fact, direct contributors to the enhancement of the overqualification problem, mostly in temporary positions. Due to general assumptions in the demand side about the implications of the candidates' education level, the surveyed retail and restoration firms prefer overqualified candidates for temporary vacancies and not overqualified candidates for indefinite vacancies. Firms face a tradeoff between the candidates' productivity and quitting rates when the vacancy is temporary but has some probability of being converted into an indefinite one.