How parents and firms’ hiring policies affect labor outcomes

Sebastiano Della Lena, Shahir Safi and Yves Zenou

No 19570, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This paper examines the interplay between social networks, firm hiring policies, and the transmission of work ethics across generations. Specifically, we analyze how firms' preferences for weak-tie referrals versus traditional screening methods influence long-term labor market outcomes, including wages and employment. We also explore the role of parents in shaping their children's work ethics and how these cultural traits affect labor market integration. The findings reveal that while weak-tie referrals may provide short-term employment benefits, they also contribute to long-run inequalities in wages and work ethics between different social groups. Furthermore, differentiated hiring policies, while effective in the short term, can perpetuate social disparities if not properly addressed through integrative policies.

Date: 2024-10
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