COVID-19 has created a ‘flight to safety’ for American job huntersJanuary 3, 2021
Americans are looking around at the job landscape and realizing that a major upheaval like the coronavirus pandemic affects some companies more than others.
“The COVID-19 pandemic shifted the focus of job-seekers toward larger and more resilient companies,” according to Shai Bernstein, an associate professor of entrepreneurial management at Harvard Business School; Richard Townsend, an associate professor of finance at the University of California, San Diego; and Ting Xu, an assistant professor of finance at the University of Virginia.
They studied job-search behavior on the AngelList Talent platform and found one common denominator: They showed greater interest in job advertisements from larger firms, particularly among searchers with more education and experience, after the onset of the pandemic. Job hunters also showed more flexibility, becoming more receptive to lower wages or jobs requiring relocation.
“The findings raise questions about how the pandemic, or other economic downturns, affect the flow of talent to start-up entrepreneurial firms,” according to their working paper, “Flight to Safety: How Economic Downturns Affect Talent Flows to Startups,” distributed by the National Bureau of Economic Research.
“We find that job seekers shifted their searches toward larger firms and away from early-stage ventures, even within the same individual over time. Simultaneously, job seekers broadened their other search parameters, considering lower salaries and a wider variety of job types, roles, markets, and locations,” Bernstein, Townsend and Xu wrote.
Early-stage ventures saw a decline in the number of applications driven by higher quality and more experienced job seekers. “This led to a deterioration in the quality of the human capital pool available to early-stage ventures during the downturn,” the authors said. “Our findings uncover a flight to safety channel in the labor market, which may amplify the pro-cyclical nature of entrepreneurial activities.”
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