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The value of reference letters

Author

Listed:
  • 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)

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," Working Papers 06/2017, Stellenbosch University, Department of Economics.
  • Handle: RePEc:sza:wpaper:wpapers282
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    References listed on IDEAS

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    Cited by:

    1. repec:oup:wbrobs:v:32:y:2017:i:2:p:127-154. is not listed on IDEAS
    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. 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.
    4. 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.
    5. De Mel,Suresh & Mckenzie,David J. & Woodruff,Christopher M. & De Mel,Suresh & Mckenzie,David J. & Woodruff,Christopher M., 2016. "Labor drops : experimental evidence on the return to additional labor in microenterprises," Policy Research Working Paper Series 7924, The World Bank.

    More about this item

    Keywords

    Unemployment; references; South Africa; active labor market policies;

    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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