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

Author

Listed:
  • 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.

Suggested Citation

  • 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 3574-3593, December.
    • 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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    More about this item

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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