Hiring Your Friends: Evidence from the Market for Financial Economists

Charles J. Hadlock and Joshua R. Pierce

ILR Review, 2021, vol. 74, issue 4, 977-1007

Abstract: The authors study connections in academic hiring in a sample of finance doctoral graduates. Departments hire PhD graduates with school connections to other recently hired faculty at a significantly greater rate than models predict. Similarly, schools exhibit an elevated propensity to hire individuals with names that indicate a similar ethnic background to incumbent department members. School-connected hires tend to publish at significantly elevated rates, a finding that is robust to a large number of model modifications and is stronger in more research-intensive departments. The evidence on school connections appears highly consistent with an employer information benefit from hiring based on school connections. Ethnic-connected hires tend to publish at lower-than-predicted rates when controlling for hiring-school characteristics, but this finding is not robust to the inclusion of hiring-school fixed effects. This evidence suggests that the possible information benefits of school-connected hiring do not immediately extend to other types of connections.

Keywords: referrals; connections; job matching; information; favoritism (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:sae:ilrrev:v:74:y:2021:i:4:p:977-1007

DOI: 10.1177/0019793919896755

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