Instituto de Economía

Abstract: Referrals can impact employment outcomes at various stages of the hiring process. We develop a model to estimate the role of referral information on job offers, acceptances, turnover, and performance. Using rich data from a call center company, we show that referrals generate a superior pool of applicants. Performance differences between referred and non-referred employees decline with tenure, and vanish after about six months. Estimates from our multi-stage hiring model reveal that referrals induce positive sorting at the job offer stage on hard-to-observe information about performance and thus referred applicants complete much of the sorting during the hiring process.