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The value of reference letters

Martin Abel (), Rulof Burger () and Patrizio Piraino ()

No 207, SALDRU Working Papers from Southern Africa Labour and Development Research Unit, 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.

Date: 2017
New Economics Papers: this item is included in nep-hrm
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