publication . Research . Preprint . 2002

Employee referrals and efficiency wages

Kugler, Adriana D.;
Open Access
  • Published: 01 Sep 2002
  • Publisher: Bonn: Institute for the Study of Labor (IZA)
Abstract
Many workers believe that personal contacts are crucial for obtaining jobs in high-wage sectors. On the other hand, firms in high-wage sectors report using employee referrals because they help provide screening and monitoring of new employees. This Paper develops a matching model that can explain the link between inter-industry wage differentials and the use of employee referrals. Referrals lower monitoring costs because high-effort referees can exert peer pressure on co-workers, allowing firms to pay lower efficiency wages. On the other hand, informal searches provide fewer job and applicant contacts than formal methods (e.g., newspaper ads). In equilibrium, th...
Subjects
mesheuropmc: health care economics and organizations
free text keywords: matching models, Vereinigte Staaten, efficiency wage models, segmentation, Effizienzlohn, social networks, J41, J63, E24, Arbeitsmarktsegmentierung, efficiency wage models; inter-industry wage differentials; matching models; segmentation; social networks; unemployment, J64, inter-industry wage differentials, J68, Inter-industry wage differentials, efficiency wage models, matching models, social networks, segmentation, unemployment, Personalauswahl, Labour, Public, Development and Health Economics, unemployment, Theorie, jel:J64, jel:E24, jel:J41, jel:J63, jel:J68, ddc:330
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publication . Research . Preprint . 2002

Employee referrals and efficiency wages

Kugler, Adriana D.;