Abstract:

Interviewing decisions often shape labor market outcomes. This paper proposes a framework for interviewing in a many-to-one matching market where firms and graduating students have capacity constraints on the number of interviews. While intuition suggests that relaxing interviewing constraints should improve the market’s operation, this is not always the case. As participants are strategic in their interviewing decisions, interviewing constraints carry subtle implications for aggregate surplus, employment, and the distribution of welfare. We relate the insights obtained to some features in matching markets. First, firms frequently pass over even stellar candidates at the market’s interviewing stage and as a result, some highly-skilled students may “fall through the cracks.” Second, relaxing students’ interviewing constraints benefits all firms and only the best students, but it adversely impacts the lower-ranked students. Third, this increase in students' capacities improves the social surplus but may decrease the number of matched agents. This may be undesirable if a social planner cares about the number of matched agents along with or as compared to, the social surplus. Fourth, in some cases a higher-ranked student may be worse off than a lower-ranked student due to firms’ interviewing constraints. We show how credible signaling can ameliorate such inefficiencies. Lastly, interviewing in the presence  of a low capacity acts as a sorting mechanism and an increase in the  interviewing capacity may even lead to a decrease in social welfare due to reduced sorting.