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The Value of Reference Letters: Experimental Evidence from South Africa

Author

Listed:
  • Martin Abel
  • Rulof Burger
  • Patrizio Piraino

Abstract

We show that reference letters from former employers alleviate information frictions in a low-skill labor market, improving applicant screening and gender equity. A resume audit study finds that using a reference letter in the application increases callbacks by 60 percent. Women drive the effect. Letters are effective because they provide valuable information about workers' skills that employers use to select applicants of higher ability. A second experiment, which encourages job seekers to obtain and use a reference letter, finds consistent results. In particular, reference letters raise job interviews and employment for women.

Suggested Citation

  • Martin Abel & Rulof Burger & Patrizio Piraino, 2020. "The Value of Reference Letters: Experimental Evidence from South Africa," American Economic Journal: Applied Economics, American Economic Association, vol. 12(3), pages 40-71, July.
    • Handle: RePEc:aea:aejapp:v:12:y:2020:i:3:p:40-71
    DOI: 10.1257/app.20180666
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    Citations

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    Cited by:

    1. Eliana Carranza & David McKenzie, 2024. "Job Training and Job Search Assistance Policies in Developing Countries," Journal of Economic Perspectives, American Economic Association, vol. 38(1), pages 221-244, Winter.
    2. Bassier, Ihsaan, 2023. "Firms and inequality when unemployment is high," Journal of Development Economics, Elsevier, vol. 161(C).
    3. Cai, Shu & Zimmermann, Klaus F., 2024. "Social identity and labor market outcomes of internal migrant workers," European Economic Review, Elsevier, vol. 163(C).
    4. Gallen, Yana & Wasserman, Melanie, 2023. "Does information affect homophily?," Journal of Public Economics, Elsevier, vol. 222(C).
    5. Bassier, Ihsaan, 2022. "Firms and inequality when unemployment is high," LSE Research Online Documents on Economics 117999, London School of Economics and Political Science, LSE Library.
    6. Samuel Bazzi & Lisa Cameron & Simone Schaner & Firman Witoelar, 2021. "Information, Intermediaries, and International Migration," Melbourne Institute Working Paper Series wp2021n30, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    7. Sam Jones & Kunal Sen, 2022. "Labour market effects of digital matching platforms: Experimental evidence from sub-Saharan Africa," WIDER Working Paper Series wp-2022-69, World Institute for Development Economic Research (UNU-WIDER).
    8. Blattman, Christopher & Dercon, Stefan & Franklin, Simon, 2022. "Impacts of industrial and entrepreneurial jobs on youth: 5-year experimental evidence on factory job offers and cash grants in Ethiopia," Journal of Development Economics, Elsevier, vol. 156(C).
    9. Kiss, Andrea & Garlick, Robert & Orkin, Kate & Hensel, Lukas, 2023. "Jobseekers' Beliefs about Comparative Advantage and (Mis)Directed Search," IZA Discussion Papers 16522, Institute of Labor Economics (IZA).
    10. Yuehao Bai, 2022. "Optimality of Matched-Pair Designs in Randomized Controlled Trials," American Economic Review, American Economic Association, vol. 112(12), pages 3911-3940, December.
    11. Abel,Martin & Carranza,Eliana & Geronimo,Kimberly Jean & Ortega Hesles,Maria Elena, 2022. "Can Temporary Wage Incentives Increase Formal Employment ? Experimental Evidence from Mexico," Policy Research Working Paper Series 10234, The World Bank.
    12. Kelley, Erin M. & Ksoll, Christopher & Magruder, Jeremy, 2024. "How do digital platforms affect employment and job search? Evidence from India," Journal of Development Economics, Elsevier, vol. 166(C).
    13. Calvin Mudzingiri & Sevias Guvuriro & Charity Gomo, 2021. "Exploring Association between Self-Reported Financial Status and Economic Preferences Using Experimental Data," JRFM, MDPI, vol. 14(6), pages 1-13, May.
    14. Chakravorty, Bhaskar & Arulampalam, Wiji & Bhatiya, Apurav Yash & Imbert, Clément & Rathelot, Roland, 2024. "Can information about jobs improve the effectiveness of vocational training? Experimental evidence from India," Journal of Development Economics, Elsevier, vol. 169(C).
    15. Ihsaan Bassier, 2022. "Firms and inequality when unemployment is high," CEP Discussion Papers dp1872, Centre for Economic Performance, LSE.
    16. Bassier, Ihsaan, 2022. "Firms and inequality when unemployment is high," LSE Research Online Documents on Economics 121970, London School of Economics and Political Science, LSE Library.
    17. Yuehao Bai, 2022. "Optimality of Matched-Pair Designs in Randomized Controlled Trials," Papers 2206.07845, arXiv.org.
    18. Lukas Hensel & Kate Orkin & Andrea Kiss & Robert Garlick, 2023. "Jobseekers' beliefs about comparative advantage and (mis)directed search," CSAE Working Paper Series 2023-11, Centre for the Study of African Economies, University of Oxford.
    19. Beber, Bernd & Lakemann, Tabea & Schnars, Regina & Lay, Jann, 2024. "Employment effects of skills trainings in Sub-Saharan Africa: A systematic review of recent randomized controlled trials," Ruhr Economic Papers 1080, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    20. Boudreau, Laura & Heath, Rachel & McCormick, Tyler H., 2024. "Migrants, experience, and working conditions in Bangladeshi garment factories," Journal of Economic Behavior & Organization, Elsevier, vol. 219(C), pages 196-213.
    21. Antinyan, Armenak & Burn, Ian & Jones, Melanie K., 2024. "Productivity Signals and Disability-Related Hiring Discrimination: Evidence from a Field Experiment," IZA Discussion Papers 17290, Institute of Labor Economics (IZA).

    More about this item

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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