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Referral and Job Performance: Evidence from the Ghana Colonial Army

Author

Listed:
  • Marcel Fafchamps
  • Alexander Moradi

Abstract

As formalized by Montgomery (1991), referral by employees improves efficiency if the unobserved quality of a new worker is higher than that of unrefereed workers. Using data compiled from army archives, we test whether the referral system in use in the British colonial army in Ghana served to improve the unobserved quality of new recruits. We find that it did not: referred recruits were more likely than unreferred recruits to desert or be dismissed as ‘inefficient’ or ‘unfit’. We find instead evidence of referee opportunism. The fact that refreed recruits have better observed characteristics at the time of the recruitment suggests that army recruiters may have been aware of this problem.

Suggested Citation

  • Marcel Fafchamps & Alexander Moradi, 2009. "Referral and Job Performance: Evidence from the Ghana Colonial Army," CSAE Working Paper Series 2009-10, Centre for the Study of African Economies, University of Oxford.
    • Handle: RePEc:csa:wpaper:2009-10
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    Cited by:

    1. Nicoletta Berardi, 2013. "Social networks and wages in Senegal’s labor market," IZA Journal of Labor & Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 2(1), pages 1-26, December.
    2. Farzana Afridi & Amrita Dhillon & Swati Sharma, 2015. "Social Networks and Labour Productivity: A Survey of Recent Theory and Evidence," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 50(1), pages 25-42.
    3. Björn Nilsson, 2019. "The School-to-Work Transition in Developing Countries," Journal of Development Studies, Taylor & Francis Journals, vol. 55(5), pages 745-764, May.
    4. Piraino Patrizio, 2020. "Drivers of mobility," WIDER Working Paper Series wp2020-6, World Institute for Development Economic Research (UNU-WIDER).
    5. Amrita Dhillon & Vegard Iversen & Gaute Torsvik, 2021. "Employee Referral, Social Proximity, and Worker Discipline: Theory and Suggestive Evidence from India," Economic Development and Cultural Change, University of Chicago Press, vol. 69(3), pages 1003-1030.
    6. Dariel, Aurelie & Riedl, Arno & Siegenthaler, Simon, 2019. "Hiring Through Referrals in a Labor Market with Adverse Selection," Research Memorandum 009, Maastricht University, Graduate School of Business and Economics (GSBE).
    7. Emre Ekinci, 2022. "Monetary rewards in employee referral programs," Manchester School, University of Manchester, vol. 90(1), pages 35-58, January.
    8. Fafchamps, Marcel & Islam, Asad & Malek, Mohammad Abdul & Pakrashi, Debayan, 2020. "Can referral improve targeting? Evidence from an agricultural training experiment," Journal of Development Economics, Elsevier, vol. 144(C).
    9. Dhillon, Amrita & Iversen, Vegard & Torsvik, Gaute, 2012. "Employee referral, social proximity and worker discipline," CAGE Online Working Paper Series 90, Competitive Advantage in the Global Economy (CAGE).
    10. Abel,Simon Martin & Burger,Rulof Petrus & Piraino,Patrizio, 2017. "The value of reference letters," Policy Research Working Paper Series 8266, The World Bank.
    11. 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).
    12. Elena Obukhova & Felicia Tian, 2024. "Referral bonuses in global talent acquisition: the role of social networks in China and the US," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 55(7), pages 864-879, September.
    13. Dhillon, Amrita & Peeters, Ronald & Bartrum, Oliver & Yüksel, Ayşe Müge, 2020. "Hiring an employee’s friends is good for business: Overcoming moral hazard with social networks," Labour Economics, Elsevier, vol. 67(C).
    14. Dariel, Aurelie & Riedl, Arno & Siegenthaler, Simon, 2021. "Referral hiring and wage formation in a market with adverse selection," Games and Economic Behavior, Elsevier, vol. 130(C), pages 109-130.
    15. Andre Hofmeyr, 2010. "Social Networks And Ethnic Niches: An Econometric Analysis Of The Manufacturing Sector In South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 78(1), pages 107-130, March.
    16. Patrizio Piraino, 2020. "Drivers of mobility," WIDER Working Paper Series wp-2020-6, World Institute for Development Economic Research (UNU-WIDER).
    17. Benjamin Lester & David A. Rivers & Giorgio Topa, 2021. "The Heterogeneous Impact of Referrals on Labor Market Outcomes," Working Papers 21-34, Federal Reserve Bank of Philadelphia.
    18. Alexander Ugarov, 2019. "Talent Misallocation across Countries: Evidence from Educational Achievement Tests," 2019 Meeting Papers 1466, Society for Economic Dynamics.
    19. Caria, Antonia Stefano & Hassen, Ibrahim Worku, 2013. "The formation of job referral networks: Experimental evidence from urban Ethiopia," IFPRI discussion papers 1282, International Food Policy Research Institute (IFPRI).
    20. Baah-Boateng, William & Twum, Eric & Twumasi Baffour, Priscilla, 2019. "“Whom you know” and labour market outcomes: An empirical investigation in Ghana," MPRA Paper 109688, University Library of Munich, Germany.
    21. Chen, Chen & Dou, Ying & Kuang, Yu Flora & Naiker, Vic, 2023. "Do professional ties enhance board seat prospects of independent directors with tainted reputations?," Journal of Banking & Finance, Elsevier, vol. 154(C).

    More about this item

    JEL classification:

    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • N47 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Africa; Oceania
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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