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The value of reference letters

Listed author(s):
  • Martin Abel

    ()

    (Faculty of Arts and Sciences, Harvard University)

  • Rulof Burger

    ()

    (Department of Economics, Stellenbosch University)

  • Patrizio Piraino

    ()

    (School of Economics, University of Cape Town)

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.

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File URL: https://www.ekon.sun.ac.za/wpapers/2017/wp062017/wp062017.pdf
File Function: First version, 2017
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Paper provided by Stellenbosch University, Department of Economics in its series Working Papers with number 06/2017.

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Date of creation: 2017
Handle: RePEc:sza:wpaper:wpapers282
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