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Who Gets the Job Referral? Evidence from a Social Networks Experiment

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  • Lori Beaman
  • Jeremy Magruder

Abstract

We use recruitment into a laboratory experiment in Kolkata, India to analyze how social networks select individuals for jobs. The experiment allows subjects to refer actual network members for casual jobs as experimental subjects under exogenously varied incentive contracts. We provide evidence that some workers, those who are high ability, have useful information about the abilities of members of their social network. However, the experiment also shows that social networks provide incentives to refer less qualified workers, and firms must counterbalance these incentives in order to effectively use existing employees to help overcome their screening problem.

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Bibliographic Info

Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 102 (2012)
Issue (Month): 7 (December)
Pages: 3574-93

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Handle: RePEc:aea:aecrev:v:102:y:2012:i:7:p:3574-93

Note: DOI: 10.1257/aer.102.7.3574
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Cited by:
  1. Christian Dustmann & Albrecht Glitz & Uta Schoenberg, 2011. "Referral-based Job Search Networks," Norface Discussion Paper Series 2011012, Norface Research Programme on Migration, Department of Economics, University College London.
  2. Bryan, Gharad & Karlan, Dean S. & Zinman, Jonathan, 2012. "You Can Pick Your Friends, But You Need to Watch Them: Loan Screening and Enforcement in a Referrals Field Experiment," CEPR Discussion Papers 8857, C.E.P.R. Discussion Papers.
  3. Giorgio Topa & Elizabeth Setren & Meta Brown, 2012. "Do Informal Referrals Lead to Better Matches? Evidence from a FirmÂ’'s Employee Referral System," 2012 Meeting Papers 648, Society for Economic Dynamics.
  4. Gharad T. Bryan & Dean Karlan & Jonathan Zinman, 2012. "Referrals: Peer Screening and Enforcement in a Consumer Credit Field Experiment," NBER Working Papers 17883, National Bureau of Economic Research, Inc.
  5. Sakai, Mayo, 2013. "How to Screen Miners' Skills: Recruiting in the Coal Mining in Early Twentieth Century Japan," ISS Discussion Paper Series (series F) f164, Institute of Social Science, The University of Tokyo, revised 27 Jan 2014.
  6. Dhillon, Amrita & Peeters, Ronald & Muge Yukse, Ayse, 2014. "Overcoming Moral Hazard with Social Networks in the Worksplace: An Experimental Approach," CAGE Online Working Paper Series 183, Competitive Advantage in the Global Economy (CAGE).
  7. Godlonton, Susan, 2014. "Employment risk and job-seeker performance:," IFPRI discussion papers 1332, International Food Policy Research Institute (IFPRI).
  8. Raymond P. Guiteras & B. Kelsey Jack, 2014. "Incentives, Selection and Productivity in Labor Markets: Evidence from Rural Malawi," NBER Working Papers 19825, National Bureau of Economic Research, Inc.
  9. Hensvik, Lena & Nordström Skans, Oskar, 2013. "Networks and youth labor market entry," Working Paper Series 2013:23, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  10. Caria, Antonia Stefano & Hassen, Ibrahim Worku, 2013. "The formation of job referral networks: Experimental evidence from ubran Ethiopia:," IFPRI discussion papers 1282, International Food Policy Research Institute (IFPRI).
  11. Hensvik, Lena & Nordström Skans, Oskar, 2013. "Social networks, employee selection and labor market outcomes," Working Paper Series 2013:15, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  12. repec:cge:warwcg:89 is not listed on IDEAS
  13. Tolga Umut Kuzubas & Andrea Szabo, 2013. "Multiple Job Search Networks: Theory and Evidence from Indonesia," Working Papers 2013/06, Bogazici University, Department of Economics.
  14. Dhillon, Amrita & Iversen, Vegard & Torsvik, Gaute, 2013. "Employee Referral, Social Proximity And Worker Discipline: Theory And Evidence From India," Working Papers in Economics 04/13, University of Bergen, Department of Economics.
  15. Long, Wenjin & Appleton, Simon & Song, Lina, 2013. "Job Contact Networks and Wages of Rural-Urban Migrants in China," IZA Discussion Papers 7577, Institute for the Study of Labor (IZA).

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