Referrals and Search Efficiency: Who Learns What and When?

41 Pages Posted: 14 Apr 2016 Last revised: 28 Jun 2017

See all articles by Tavis Barr

Tavis Barr

Beijing Normal University (BNU)

Raicho Bojilov

Pontificia Universidad Católica de Chile - School of Business

Lalith Munasinghe

Barnard College, Columbia University

Date Written: May 2017

Abstract

Referrals can impact screening and self-selection of applicants during the hiring process. We model and estimate how referral information affects the selection of employees through job offers, acceptances, and turnover. Using rich data from a call center company, we show that referrals help employers attract applicants with superior performance. Yet, performance differences between referred and non-referred workers diminish with tenure through selective turnover. Our estimates reveal that referrals allow employers to screen on hard-to-observe but performance-relevant attributes for employees of both high performance and high propensity to stay. Thus, referred applicants complete much of the sorting during the hiring process.

Keywords: referrals, employer learning, learning about match quality

JEL Classification: J24, J31, M51

Suggested Citation

Barr, Tavis and Bojilov, Raicho and Munasinghe, Lalith, Referrals and Search Efficiency: Who Learns What and When? (May 2017). Available at SSRN: https://ssrn.com/abstract=2763327 or http://dx.doi.org/10.2139/ssrn.2763327

Tavis Barr

Beijing Normal University (BNU) ( email )

19 Xinjiekou Outer St
Haidian District
Beijing, Guangdong 100875
China

Raicho Bojilov (Contact Author)

Pontificia Universidad Católica de Chile - School of Business ( email )

Vicuna Mackenna 4860
Santiago
Chile

Lalith Munasinghe

Barnard College, Columbia University ( email )

3009 Broadway
New York, NY 10027
United States
212-854-5652 (Phone)

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