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American Economic Review: Vol. 102 No. 7 (December 2012)

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Who Gets the Job Referral? Evidence from a Social Networks Experiment

Article Citation

Beaman, Lori, and Jeremy Magruder. 2012. "Who Gets the Job Referral? Evidence from a Social Networks Experiment." American Economic Review, 102(7): 3574-93.

DOI: 10.1257/aer.102.7.3574

Abstract

We use recruitment into a laboratory experiment in Kolkata, India to analyze how social networks select individuals for jobs. The experiment allows subjects to refer actual network members for casual jobs as experimental subjects under exogenously varied incentive contracts. We provide evidence that some workers, those who are high ability, have useful information about the abilities of members of their social network. However, the experiment also shows that social networks provide incentives to refer less qualified workers, and firms must counterbalance these incentives in order to effectively use existing employees to help overcome their screening problem.

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Authors

Beaman, Lori (Northwestern U)
Magruder, Jeremy (U CA, Berkeley)

JEL Classifications

C91: Design of Experiments: Laboratory, Individual
D12: Consumer Economics: Empirical Analysis
O12: Microeconomic Analyses of Economic Development
Z13: Economic Sociology; Economic Anthropology; Social and Economic Stratification


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