Who Gets the Job Referral? Evidence from a Networks Experiment

Lori Beaman, Northwestern University
Jeremy Magruder, University of California, Berkeley

Despite a wealth of knowledge that job networks are important, we know little about how exactly they work. Network theory suggests that individuals face two competing incentives in selecting a referral: the incentive to refer a high quality match, and the incentive to refer a close friend or family member. We simulate a day-labor environment using a novel experiment in Kolkata, India to learn who gets selected as a referral. Original participants perform a task and are asked to refer network members to the experiment, with randomized incentives to refer someone who is skilled at the task, while shared social bonds are measured through behavioral games. Preliminary results suggest that highly-skilled original participants do refer high quality network members, but only if they are directly incentivized. Future work will focus on the interaction between social capital, incentives, and the performance of referrals.

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Presented in Session 122: Labor Market Networks