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Random or Referral Hiring: When Social Connections Matter

Author

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  • Nicodemo, Catia

    () (University of Oxford)

  • Nicolini, Rosella

    () (Universitat Autònoma de Barcelona)

Abstract

This study investigates the existence of hiring criteria associated with the degree of social connections between skill and low-skill workers. We provide evidence about to what extent managers rely on their social connections in recruiting low-skill workers rather than on random matching. As one unique feature we follow an approach for a posted wage setting that reflects the main features of the Spanish labor market. By working with sub-samples of high and low-skill workers we are able to assess that the recruitment of low-skill immigrants quite often follows a referral strategy and we identify interesting irregularities across the ethnic groups. As a common feature, referral hiring is usually influences by the ethnicity of the manager and the relative proportion of immigrants within the firm. Under these perspectives, our study outlines new insights to evaluate the future perspectives of the Spanish labor market.

Suggested Citation

  • Nicodemo, Catia & Nicolini, Rosella, 2012. "Random or Referral Hiring: When Social Connections Matter," IZA Discussion Papers 6312, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp6312
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    References listed on IDEAS

    as
    1. Laura Giuliano & David I. Levine & Jonathan Leonard, 2009. "Manager Race and the Race of New Hires," Journal of Labor Economics, University of Chicago Press, vol. 27(4), pages 589-631, October.
    2. Oriana Bandiera & Iwan Barankay & Imran Rasul, 2009. "Social Connections and Incentives in the Workplace: Evidence From Personnel Data," Econometrica, Econometric Society, vol. 77(4), pages 1047-1094, July.
    3. Casella, Alessandra & Hanaki, Nobuyuki, 2008. "Information channels in labor markets: On the resilience of referral hiring," Journal of Economic Behavior & Organization, Elsevier, vol. 66(3-4), pages 492-513, June.
    4. Farré Lidia & González Libertad & Ortega Francesc, 2011. "Immigration, Family Responsibilities and the Labor Supply of Skilled Native Women," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 11(1), pages 1-48, June.
    5. Olof Åslund & Lena Hensvik & Oskar Nordström Skans, 2014. "Seeking Similarity: How Immigrants and Natives Manage in the Labor Market," Journal of Labor Economics, University of Chicago Press, vol. 32(3), pages 405-441.
    6. Deepti Goel & Kevin Lang, 2009. "Social Ties and the Job Search of Recent Immigrants," NBER Working Papers 15186, National Bureau of Economic Research, Inc.
    7. Giovanni Peri & Chad Sparber, 2016. "Task Specialization, Immigration, and Wages," World Scientific Book Chapters,in: The Economics of International Migration, chapter 3, pages 81-115 World Scientific Publishing Co. Pte. Ltd..
    8. Catalina Amuedo-Dorantes & Sara de la Rica, 2008. "Complements or Substitutes? Immigrant and Native Task Specialization in Spain," Working Papers 2008-35, FEDEA.
    9. Kevin Lang & Michael Manove & William T. Dickens, 2005. "Racial Discrimination in Labor Markets with Posted Wage Offers," American Economic Review, American Economic Association, vol. 95(4), pages 1327-1340, September.
    10. Catia Nicodemo, 2009. "Heterogeneity across Immigrants in the Spanish Labour Market: Advantage and Disadvantage," Working Papers wpdea0909, Department of Applied Economics at Universitat Autonoma of Barcelona.
    11. Bernt Bratsberg & Oddbjørn Raaum, 2012. "Immigration and Wages: Evidence from Construction," Economic Journal, Royal Economic Society, vol. 122(565), pages 1177-1205, December.
    12. Deepti Goel & Kevin Lang, 2009. "Social Ties and the Job Search of Recent Immigrants," NBER Working Papers 15186, National Bureau of Economic Research, Inc.
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    More about this item

    Keywords

    ethnicity; hiring strategies; social networks;

    JEL classification:

    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing

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