Employer Reputation and the Labor Market: Evidence from Glassdoor.com and Dice.com

How does employer reputation affect the labor market? We investigate this question using a novel dataset combining reviews from Glassdoor.com and job applications data from Dice.com. Labor market institutions such as Glassdoor.com crowd-sources information about employers to alleviate information problems faced by workers when choosing an employer. Raw crowd-sourced employer ratings are rounded when displayed to job seekers. By exploiting the rounding threshold, we identify the causal impact of Glassdoor ratings using a regression discontinuity framework. We document the effects of such ratings on both the demand and supply sides of the labor market. We find that displayed employer reputation affects an employer's ability to attract workers, especially when the displayed rating is "sticky." Employers respond to having a rating above the rounding threshold by posting more new positions and re-activating more job postings. The effects are the strongest for private, smaller, and less established firms, suggesting that online reputation is a substitute for other types of reputation.