Employee Referral, Social Proximity and Worker Discipline: Theory and Evidence from India
AbstractWe study an important mechanism underlying employee referrals into informal low skilled jobs in developing countries. Employers can exploit social preferences between employee referees and potential workers to improve discipline. The profitability of using referrals increases with referee stakes in the firm, and, in most cases, with the strength of the social tie between the referee and the new recruit. We provide an empirical counterpart to these results using primary data covering low- and unskilled migrants in India. Consistent with the theoretical predictions, we find a high prevalence of workplace referral and strong kinship ties between referees and new recruits. Finally, workplace intermediaries are different from and typically in more ‘prestigious’ jobs than those recruited.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 4309.
Date of creation: 2013
Date of revision:
networks; low- and unskilled jobs; India; moral hazard; employee referrals; efficiency wages; referee incentives; strength of ties;
Other versions of this item:
- 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.
- J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
- O12 - Economic Development, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
- O17 - Economic Development, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
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.:
- Antoni Calvó-Armengol & Matthew O. Jackson, 2003.
"Networks in Labor Markets: Wage and Employment Dynamics and Inequality,"
55, Barcelona Graduate School of Economics.
- Calvo-Armengol, Antoni & Jackson, Matthew O., 2007. "Networks in labor markets: Wage and employment dynamics and inequality," Journal of Economic Theory, Elsevier, vol. 132(1), pages 27-46, January.
- Vegard Iversen & Kunal Sen & Arjan Verschoor & Amaresh Dubey, 2009.
"Job Recruitment Networks and Migration to Cities in India,"
Journal of Development Studies,
Taylor & Francis Journals, vol. 45(4), pages 522-543.
- Vegard Iversen & Kunal Sen & Arjan Verschoor & Amaresh Dubey, 2009. "Job recruitment networks and migration to cities in India," Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers 09-01, Indian Statistical Institute, New Delhi, India.
- Charles F. Manski, 2000.
"Economic Analysis of Social Interactions,"
NBER Working Papers
7580, National Bureau of Economic Research, Inc.
- 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.
- Lori Beaman & Jeremy Magruder, 2012. "Who Gets the Job Referral? Evidence from a Social Networks Experiment," American Economic Review, American Economic Association, vol. 102(7), pages 3574-93, December.
- Oriana Bandiera & Iwan Barankay & Imran Rasul, 2009.
"Social Connections and Incentives in the Workplace: Evidence From Personnel Data,"
Econometric Society, vol. 77(4), pages 1047-1094, 07.
- Bandiera, Oriana & Barankay, Iwan & Rasul, Imran, 2008. "Social Connections and Incentives in the Workplace: Evidence from Personnel Data," IZA Discussion Papers 3917, Institute for the Study of Labor (IZA).
- Bandiera, Oriana & Barankay, Iwan & Rasul, Imran, 2009. "Social Connections and Incentives in the Workplace: Evidence from Personnel Data," CEPR Discussion Papers 7114, C.E.P.R. Discussion Papers.
- Wahba, Jackline & Zenou, Yves, 2004.
"Density, Social Networks and Job Search Methods: Theory and Application to Egypt,"
Working Paper Series
629, Research Institute of Industrial Economics.
- Wahba, Jackline & Zenou, Yves, 2005. "Density, social networks and job search methods: Theory and application to Egypt," Journal of Development Economics, Elsevier, vol. 78(2), pages 443-473, December.
- Wahba, Jackline & Zenou, Yves, 2003. "Density, Social Networks and Job Search Methods: Theory and Application to Egypt," CEPR Discussion Papers 3967, C.E.P.R. Discussion Papers.
- Saloner, Garth, 1985. "Old Boy Networks as Screening Mechanisms," Journal of Labor Economics, University of Chicago Press, vol. 3(3), pages 255-67, July.
- Winters, Paul C. & de Janvry, Alain & Sadoulet, Elisabeth, 1999.
"Family And Community Networks In Mexico-U.S. Migration,"
12907, University of New England, School of Economics.
- Paul Winters & Alain de Janvry & Elisabeth Sadoulet, 2001. "Family and Community Networks in Mexico-U.S. Migration," Journal of Human Resources, University of Wisconsin Press, vol. 36(1), pages 159-184.
- James P. Smith & Duncan Thomas, 2003.
"Remembrances of things past: test-retest reliability of retrospective migration histories,"
Journal of the Royal Statistical Society Series A,
Royal Statistical Society, vol. 166(1), pages 23-49.
- James P. Smith & Duncan Thomas, 2004. "Remembrances of Things Past: Test-Retest Reliability of Retrospective Migration Histories," Labor and Demography 0403026, EconWPA.
- Banerjee, Biswajit, 1991. "The determinants of migrating with a pre-arranged job and of the initial duration of urban unemployment : An analysis based on Indian data on rural-to-urban migrants," Journal of Development Economics, Elsevier, vol. 36(2), pages 337-351, October.
- Kei Kajisa, 2007. "Personal Networks and Nonagricultural Employment: The Case of a Farming Village in the Philippines," Economic Development and Cultural Change, University of Chicago Press, vol. 55, pages 669-707.
- Kaivan Munshi & Mark Rosenzweig, 2006. "Traditional Institutions Meet the Modern World: Caste, Gender, and Schooling Choice in a Globalizing Economy," American Economic Review, American Economic Association, vol. 96(4), pages 1225-1252, September.
- Morris David Morris, 1955. "Labor Discipline, Trade-Unions, and the State in India," Journal of Political Economy, University of Chicago Press, vol. 63, pages 293.
- Kaivan Munshi, 2003. "Networks In The Modern Economy: Mexican Migrants In The U.S. Labor Market," The Quarterly Journal of Economics, MIT Press, vol. 118(2), pages 549-599, May.
- Kono, Hisaki, 2006. "Employment with connections: Negative network effects," Journal of Development Economics, Elsevier, vol. 81(1), pages 244-258, October.
- Montgomery, James D, 1991. "Social Networks and Labor-Market Outcomes: Toward an Economic Analysis," American Economic Review, American Economic Association, vol. 81(5), pages 1407-18, December.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Julio Saavedra).
If references are entirely missing, you can add them using this form.