Paper Title: “Job Referrals and Labor market Outcomes Across Occupations” with David Rivers and Giorgio Topa
Abstract: Though a significant fraction of workers and firms report using a referral somewhere in the hiring process, it remains unclear exactly what role referrals play (if any) in the hiring process. We exploit a novel data set to shed light on this question. Importantly, the data enables us to distinguish between different types of referrals—namely, those from family and friends and those from business contacts—and different types of jobs, as measured by the skill requirement of the occupation. Using these distinctions, we document clear patterns with respect to the frequency with which different types of referrals are used by workers in different occupations, and the subsequent labor market outcomes. Then we develop a structural equilibrium model that can match the patterns we observe in the data, calibrate the key parameters, and use it to study the effects of social and business networks on employment rates, earnings, and job turnover across workers and occupations.