Working Paper: NBER ID: w29246
Authors: Conrad Miller; Ian M. Schmutte
Abstract: We study how referral hiring contributes to racial inequality in firm-level labor demand over the firm's life cycle using data from Brazil. We consider a search model where referral networks are segregated, firms are more informed about the match quality of referred candidates, and some referrals are made by non-referred employees. Consistent with the model, we find that firms are more likely to hire candidates and less likely to dismiss employees of the same race as the founder, but these differences diminish as firms' cumulative hires increase. Referral hiring helps to explain racial differences in dismissals, seniority, and employer size.
Keywords: referral hiring; racial inequality; Brazil; labor demand; employment
JEL Codes: J71; M51; Z13
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Founder race (L26) | Racial composition of hires (J79) |
| Racial composition of hires (J79) | Racial disparities in dismissals (J79) |
| Cumulative hires (J23) | Influence of founder race on hiring (J15) |
| Founder race (L26) | Turnover rates of hires (J63) |
| Cumulative hires (J23) | Racial differences in dismissal rates (J79) |