Ethiopian employer found reimbursing application costs attracted better candidates

Employers running a demanding hiring process — requiring travel to a test site, unpaid time off work, or an application fee — generally assume that cost functions as screening: only genuinely motivated, capable candidates will bother clearing the hurdle, so the friction itself improves the applicant pool's quality even as it shrinks it. This assumption is rarely tested directly, since most employers never run a controlled comparison against a version of their own hiring process without the cost attached.

Girum Abebe, A. Stefano Caria and Esteban Ortiz-Ospina ran a field experiment with a real employer conducting an actual hiring drive in Addis Ababa, randomly offering some applicants a small monetary incentive covering the cost of applying and attending the test — travel, an application fee, the lost time from a work shift — while other applicants faced the standard costly process unchanged.

Reimbursed application costs, removing the friction that drove away the best candidates, and found the pool got better, not worse.

High-ability candidates have better outside options, so they are more deterred by costly application processes.

Reimbursing costs removed the specific barrier that disproportionately kept high-ability candidates from applying.

The resulting applicant pool was not just larger but also higher quality on average, as the friction had been screening out the best.

Local recruiters underestimated this effect, showing the 'cost equals screening' assumption is widespread and rarely tested.

Before assuming a costly process filters for quality, test whether it filters out the best candidates—those with strong outside options are often the first to walk away.

The employer that offered the small monetary incentive for applying attracted a larger and, on average, more talented applicant pool — not merely a bigger pool of the same average quality. A structural model estimated that the cost of making a job application was large and positively correlated with jobseeker ability, driven by dynamic selection: higher-ability jobseekers have better outside options and less patience for a slow, low-odds hiring process, so they are the ones most likely to give up and take another offer rather than wait out a costly, friction-heavy application.