Do Informal Referrals Lead to Better Matches? Evidence from a Firm's Employee Referral System

Meta Brown, Elizabeth Setren (esetren@mit.edu) and Giorgio Topa
Additional contact information
Elizabeth Setren: MIT

No 8175, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Using a new firm-level dataset that includes explicit information on referrals by current employees, we investigate the hiring process and the relationships among referrals, match quality, wage trajectories and turnover for a single U.S. corporation, and test various predictions of theoretical models of labor market referrals. We find that referred candidates are more likely to be hired; experience an initial wage advantage which dissipates over time; and have longer tenure in the firm. Further, the variances of the referred and non-referred wage distributions converge over time. The observed referral effects appear to be stronger at lower skill levels. The data also permit analysis of the role of referrer-referee pair characteristics.

Keywords: turnover; human resources; referrals; wage trajectory (search for similar items in EconPapers)
JEL-codes: J30 J63 J64 (search for similar items in EconPapers)
Pages: 57 pages
Date: 2014-05
New Economics Papers: this item is included in nep-hrm, nep-lab, nep-lma and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

Published - published in: Journal of Labor Economics, 2016, 34 (1 Part 1), 161–209

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Related works:
Journal Article: Do Informal Referrals Lead to Better Matches? Evidence from a Firm's Employee Referral System (2016)
Working Paper: Do informal referrals lead to better matches? Evidence from a firm's employee referral system (2012)
Working Paper: Do Informal Referrals Lead to Better Matches? Evidence from a FirmÂ’'s Employee Referral System (2012)
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