publication . Research . Preprint . 2013

The Value of Hiring through Referrals

Burks, Stephen V.; Cowgill, Bo; Hoffman, Mitchell; Housman, Michael;
Open Access English
  • Published: 01 May 2013
  • Publisher: Bonn: Institute for the Study of Labor (IZA)
Employee referrals are a very common means by which firms hire new workers. Past work suggests that workers hired via referrals often perform better than non-referred workers, but we have little understanding as to why. In this paper, we demonstrate that this is primarily because referrals allow firms to select workers better-suited for particular jobs. To test our model, we use novel and detailed productivity and survey data from nine large firms in three industries: call-centers, trucking, and high-tech (software). Referred workers are 10-30% less likely to quit and have substantially higher performance on rare "high-impact metrics" (e.g. creating patents and ...
free text keywords: M51, J24, O32, J63, L84, L86, L92, referrals, productivity, worker selection, innovation, patents, cognitive ability, non-cognitive ability, job testing, call centers, high-tech, software, trucking, truck accidents, high-tech, call centers, job testing, non-cognitive ability, cognitive ability, patents, innovation, worker selection, productivity, referrals, software, trucking, truck accidents, ddc:330, jel:M51, jel:J24, jel:O32, jel:J63, jel:L84, jel:L86, jel:L92
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