Referral Hiring of Miners: Case from the Coal Industry in Early Twentieth-Century Japan

Many firms do hire workers by referral hiring and, thus, recognize its worth as one of the hiring method used personal networks. This study investigates under what circumstances and for what type of workers a firm can more efficiently use referral hiring than otherwise in the Japanese coal mining industry in the 1900s, which was the fast-growing industry in the emerging economy. We first predict, based on our model, that referral hiring is more efficient when job applicants' skills are too complicated or sophisticated for employers to decide on a right candidate. Then, building an original data set from employment contract documents from a colliery operated in the 1900s, we show that traditional manual skilled workers were likely to be hired through referrals, while modernized skilled workers and unskilled workers were not likely to be hired through referrals.