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The value of reference letters

Author

Listed:
  • Martin Abel

    (Harvard University)

  • Rulof Burger

    (Stellenbosch University)

  • Patrizio Piraino

    (SALDRU, University of Cape Town)

Abstract

We show that reference letters from former employers alleviate information asymmetries about workers' skills and improve both match quality and equity in the labor market. A resume audit study finds that using a reference letter in the application increases callbacks by 61%. Women disproportionately benefit. Letters are effective because they provide valuable information about workers' skills that employers use to select applicants of higher ability. A second experiment, which encourages job seekers to obtain and use a reference letter, finds consistent results. In particular, employment rates for women who obtain letters double, fully closing the gender gap in our sample.

Suggested Citation

  • Martin Abel & Rulof Burger & Patrizio Piraino, 2017. "The value of reference letters," SALDRU Working Papers 207, Southern Africa Labour and Development Research Unit, University of Cape Town.
  • Handle: RePEc:ldr:wpaper:207
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    References listed on IDEAS

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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Bosses face more discrimination if they are women – from employees of any gender
      by ? in DJG Blogger on 2019-10-17 11:41:53
    2. Why women bosses get different reactions than men when they criticize employees
      by ? in DJG Blogger on 2020-09-11 00:42:29
    3. Why female bosses get different reactions than men when they criticize employees
      by ? in DJG Blogger on 2020-09-11 00:42:29
    4. This one unconscious reaction may be holding women back at work
      by ? in Co.Exist on 2020-09-19 05:00:32

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    Cited by:

    1. Martin Abel & Rulof Burger & Eliana Carranza & Patrizio Piraino, 2019. "Bridging the Intention-Behavior Gap? The Effect of Plan-Making Prompts on Job Search and Employment," American Economic Journal: Applied Economics, American Economic Association, vol. 11(2), pages 284-301, April.
    2. David McKenzie, 2017. "How Effective Are Active Labor Market Policies in Developing Countries? A Critical Review of Recent Evidence," World Bank Research Observer, World Bank Group, vol. 32(2), pages 127-154.
    3. Suresh de Mel & David McKenzie & Christopher Woodruff, 2019. "Labor Drops: Experimental Evidence on the Return to Additional Labor in Microenterprises," American Economic Journal: Applied Economics, American Economic Association, vol. 11(1), pages 202-235, January.
    4. Calvin Mudzingiri & Sevias Guvuriro & Charity Gomo, 2021. "Exploring Association between Self-Reported Financial Status and Economic Preferences Using Experimental Data," Journal of Risk and Financial Management, MDPI, Open Access Journal, vol. 14(6), pages 1-13, May.
    5. Daniela Sonedda, 2020. "Guess who's there: employment protection legislation and the degree of substitutability between labour contracts," IAAEU Discussion Papers 202007, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
    6. Livia Alfonsi & Oriana Bandiera & Vittorio Bassi & Robin Burgess & Imran Rasul & Munshi Sulaiman & Anna Vitali, 2020. "Tackling Youth Unemployment: Evidence From a Labor Market Experiment in Uganda," Econometrica, Econometric Society, vol. 88(6), pages 2369-2414, November.
    7. Chakravarty, Shubha & Lundberg, Mattias & Nikolov, Plamen & Zenker, Juliane, 2019. "Vocational training programs and youth labor market outcomes: Evidence from Nepal," Journal of Development Economics, Elsevier, vol. 136(C), pages 71-110.
    8. Abebe, Girum & Caria, Stefano & Fafchamps, Marcel & Falco, Paolo & Franklin, Simon & Quinn, Simon, 2017. "Anonymity of distance? Job search and labour market exclusion in a growing African city," LSE Research Online Documents on Economics 86573, London School of Economics and Political Science, LSE Library.
    9. Abebe, Girum & Caria, Stefano & Fafchamps, Marcel & Falco, Paolo & Franklin, Simon & Quinn, Simon, 2017. "Anonymity of distance? Job search and labour market exclusion in a growing African city," LSE Research Online Documents on Economics 86573, London School of Economics and Political Science, LSE Library.
    10. Chakravorty, Bhaskar & Arulampalam, Wiji & Imbert, Clement & Rathelot, Roland, 2021. "Can Information about Jobs Improve the Effectiveness of Vocational Training? Experimental Evidence from India," IZA Discussion Papers 14427, Institute of Labor Economics (IZA).
    11. Wheeler, Laurel & Garlick, Robert & Johnson, Eric & Shaw, Patrick & Gargano, Marissa, 2019. "LinkedIn(to) Job Opportunities: Experimental Evidence from Job Readiness Training," Working Papers 2019-14, University of Alberta, Department of Economics.
    12. Christopher Blattman & Stefan Dercon & Simon Franklin, 2019. "Impacts of Industrial and Entrepreneurial Jobs on Youth: 5-year Experimental Evidence on Factory Job Offers and Cash Grants in Ethiopia," NBER Working Papers 25788, National Bureau of Economic Research, Inc.
    13. Crepon,Bruno Jacques Jean Philippe & Premand,Patrick, 2018. "Creating new positions ? direct and indirect effects of a subsidized apprenticeship program," Policy Research Working Paper Series 8561, The World Bank.
    14. Chakravarty, Shubha & Lundberg, Mattias & Nikolov, Plamen & Zenker, Juliane, 2019. "Vocational training programs and youth labor market outcomes: Evidence from Nepal," Journal of Development Economics, Elsevier, vol. 136(C), pages 71-110.
    15. Martin Abel, 2017. "Labor market discrimination and sorting: Evidence from South Africa," SALDRU Working Papers 205, Southern Africa Labour and Development Research Unit, University of Cape Town.
    16. Patrizio Piraino, 2020. "Drivers of mobility," WIDER Working Paper Series wp-2020-6, World Institute for Development Economic Research (UNU-WIDER).
    17. Aniceto C. Orbeta Jr. & Vicente B. Paqueo, 2018. "Countering the Discriminatory Impact of Minimum Wages Against Disadvantaged Workers: Literature Review and Experimental Design Development," Working Papers id:12861, eSocialSciences.

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    More about this item

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • M51 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Firm Employment Decisions; Promotions

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