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The value of hiring through employee referrals in developed countries

Author

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  • Mitchell Hoffman

    (University of Toronto Rotman School of Management, Canada)

Abstract

Companies frequently hire new employees based on referrals from existing employees, who often recommend friends or family members. There are numerous possible benefits from this, such as lower turnover, possibly higher productivity, lower recruiting costs, and beneficial commonalities related to shared employee values. On the other hand, hiring through employee referrals may disadvantage under-represented minorities, entail greater firm costs in the form of higher wages, lead to undesirable commonalities, and reflect nepotism. A growing body of research explores these considerations.

Suggested Citation

  • Mitchell Hoffman, 2017. "The value of hiring through employee referrals in developed countries," IZA World of Labor, Institute of Labor Economics (IZA), pages 369-369, June.
    • Handle: RePEc:iza:izawol:journl:2017:n:369
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    References listed on IDEAS

    as
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    11. Meta Brown & Elizabeth Setren & Giorgio Topa, 2016. "Do Informal Referrals Lead to Better Matches? Evidence from a Firm's Employee Referral System," Journal of Labor Economics, University of Chicago Press, vol. 34(1), pages 161-209.
    12. Amanda Pallais & Emily Glassberg Sands, 2016. "Why the Referential Treatment? Evidence from Field Experiments on Referrals," Journal of Political Economy, University of Chicago Press, vol. 124(6), pages 1793-1828.
    13. Linda Datcher Loury, 2006. "Some Contacts Are More Equal than Others: Informal Networks, Job Tenure, and Wages," Journal of Labor Economics, University of Chicago Press, vol. 24(2), pages 299-318, April.
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    Cited by:

    1. Panle Jia Barwick & Yanyan Liu & Eleonora Patacchini & Qi Wu, 2023. "Information, Mobile Communication, and Referral Effects," American Economic Review, American Economic Association, vol. 113(5), pages 1170-1207, May.
    2. Anastasia Sinitsyna & Karin Torpan & Raul Eamets & Tiit Tammaru, 2021. "Overlap Between Industrial Niching and Workplace Segregation: Role of Immigration Policy, Culture and Country of Origin," Social Inclusion, Cogitatio Press, vol. 9(2), pages 179-191.
    3. Jessica Goldberg & Mario Macis & Pradeep Chintagunta, 2023. "Incentivized Peer Referrals for Tuberculosis Screening: Evidence from India," American Economic Journal: Applied Economics, American Economic Association, vol. 15(1), pages 259-291, January.
    4. Osman, Adam & Speer, Jamin D. & Weaver, Andrew, 2022. "Connections, Referrals, and Hiring Outcomes: Evidence from an Egyptian Establishment Survey," Journal of Economic Behavior & Organization, Elsevier, vol. 204(C), pages 342-355.
    5. Rose, Michael E. & Shekhar, Suraj, 2023. "Adviser connectedness and placement outcomes in the economics job market," Labour Economics, Elsevier, vol. 84(C).
    6. Michael E. Rose & Suraj Shekhar, 2021. "Indirect Contacts in Hiring: The Economics Job Market," Working Papers 55, Ashoka University, Department of Economics.
    7. Goldberg, Jessica & Macis, Mario & Chintagunta, Pradeep, 2018. "Leveraging Patients' Social Networks to Overcome Tuberculosis Underdetection: A Field Experiment in India," IZA Discussion Papers 11942, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    referrals; hiring; social networks;
    All these keywords.

    JEL classification:

    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor

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