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How Much Do Employers Learn from Referrals?

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Author Info
Joshua C. Pinkston () (U.S. Bureau of Labor Statistics)

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Abstract

This paper tests the hypothesis that referrals from various sources provide employers with more information about job applicants than they would have without a referral. I use data from the 1982 EOPP Survey of employers that contain information on two workers in the same job, allowing me to cancel out differences in job and firm characteristics and control for the possibility that workers with referrals from different sources (or no referral at all) might sort into jobs that put different weights on individual performance. My estimation results provide evidence consistent with referrals from friends and family members providing employers with more information than they would have otherwise. Despite the information they provide, however, it appears as though referrals from family members are associated with jobs that put less weight on performance overall. On the other hand, referrals from other employers or labor unions appear to provide little, if any, information but are associated with jobs that put more weight on performance than the average job does. I find no evidence that referrals from schools, community organizations or other sources provide useful information.

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Publisher Info
Paper provided by U.S. Bureau of Labor Statistics in its series Working Papers with number 392.

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Length: 22 pages
Date of creation: Feb 2006
Date of revision:
Handle: RePEc:bls:wpaper:ec060040

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Related research
Keywords: Referrals Recruiting Methods Labor Market Information

Find related papers by JEL classification:
J6 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies
M51 - Business Administration and Business Economics; Marketing; Accounting - - Personnel Economics - - - Firm Employment Decisions; Promotions
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Cornell, Bradford & Welch, Ivo, 1996. "Culture, Information, and Screening Discrimination," Journal of Political Economy, University of Chicago Press, vol. 104(3), pages 542-71, June. [Downloadable!] (restricted)
  2. Pinkston, Joshua C., 2003. "Screening discrimination and the determinants of wages," Labour Economics, Elsevier, vol. 10(6), pages 643-658, December. [Downloadable!] (restricted)
  3. Dennis J. Aigner & Glen G. Cain, 1977. "Statistical theories of discrimination in labor markets," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 30(2), pages 175-187, January.
  4. Jovanovic, Boyan, 1979. "Job Matching and the Theory of Turnover," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 972-90, October. [Downloadable!] (restricted)
    Other versions:
  5. Simon, Curtis J & Warner, John T, 1992. "Matchmaker, Matchmaker: The Effect of Old Boy Networks on Job Match Quality, Earnings, and Tenure," Journal of Labor Economics, University of Chicago Press, vol. 10(3), pages 306-30, July. [Downloadable!] (restricted)
  6. Kugler, Adriana D., 2003. "Employee referrals and efficiency wages," Labour Economics, Elsevier, vol. 10(5), pages 531-556, October. [Downloadable!] (restricted)
  7. Harry J. Holzer, 1987. "Hiring Procedures in the Firm: Their Economic Determinants and Outcomes," NBER Working Papers 2185, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  8. Blau, David M & Robins, Philip K, 1990. "Job Search Outcomes for the Employed and Unemployed," Journal of Political Economy, University of Chicago Press, vol. 98(3), pages 637-55, June. [Downloadable!] (restricted)
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