Working Paper: NBER ID: w21357
Authors: Amanda Pallais; Emily Glassberg Sands
Abstract: Referred workers are more likely than non-referred workers to be hired, all else equal. In three field experiments in an online labor market, we examine why. We find that referrals contain positive information about worker performance and persistence that is not contained in workers' observable characteristics. We also find that referrals performed particularly well when working directly with their referrers. However, we do not find evidence that referrals exert more effort because they believe their performance will affect their relationship with their referrer or their referrer's position at the firm.
Keywords: referrals; worker performance; field experiments; labor market
JEL Codes: C93; J24; J63; M51
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Referrals provide positive information about worker quality (J24) | Higher performance and lower turnover rates compared to non-referred workers (J63) |
| Referrals provide positive information about worker quality (J24) | Referred workers outperform non-referred workers in tasks they were not directly referred for (J62) |
| Referred workers perform better when working directly with their referrers (J29) | Enhanced performance due to increased motivation or accountability (M54) |
| Monitored referrals do not perform significantly better than non-monitored referrals (C52) | Limited peer influence (C92) |