How Labor Market Competition Shapes Workplace Information on Social Media: Evidence from Glassdoor Reviews

Abstract:

We examine the effect of labor market competition on the quality of the workplace information available on social media. Using Glassdoor reviews to capture workplace information in the labor market, we find that positive employer reviews are less informative in terms of explaining the actual workplace practices in firms that face intense labor market competition. The effect is more pronounced when there is a greater information asymmetry in the labor market, when firms have greater concerns about the costs of attracting talent or need to recruit more employees, when there is a negative shock to the labor supply in the local market, and when Glassdoor is more widely used in the local labor market. Taken together, these results suggest that firms strategically manage their workplace information on social media, potentially inflating their reputations without substantively improving their workplace practices.