The Costs of Hiring Skilled Workers

Hiring workers is costly and therefore influences the firm’s labor demand. We make use of Swiss administrative survey data on directly measured hiring costs in order to quantify both their magnitude and determinants at the firm-level. Our results show that hiring costs are substantial, as average hiring costs amount to more than one-quarter of wage payments. However, the level of hiring costs differs sharply by industry, occupation and the economic environment of the firm. Furthermore, our findings indicate that marginal hiring costs increase in the number of hires.