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Joint S.C. Tsiang Macroeconomics & Microeconomic Theory Workshop: Matthew Jackson

Thursday, September 12, 2019 at 11:40am to 1:10pm

Uris Hall, 498
Central Campus

Matthew Jackson - Stanford University

The Role of Job Referrals in Inequality and Inefficiency

Abstract:  Most labor markets rely on a combination of referrals and open applications in hiring.  Referrals screen candidates and so lead to better matches and increased productivity.  Thus, concentrating referrals among a subgroup of the population can decrease the overall productivity in the market.  As individuals who have multiple referrals end up with higher wages, on average, concentrating referrals also tends to increase inequality.  The relationships between referrals and productivity and inequality, however, are counteracted by a “Lemons Effect”:  some candidates found via open applications have already been referred for a job and rejected.  As referrals become more concentrated, the Lemons Effect diminishes.  We characterize how productivity and inequality depend on how referrals are distributed across different groups, fully accounting for the Lemons Effect.


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Event Type

Class/ Workshop




economics, EconSeminar, EconMacro, EconMicro



Contact E-Mail

Contact Name

Amy Moesch

Contact Phone



Matthew Jackson

Speaker Affiliation

Stanford University

Open To

Cornell Economics Community (List Serve Members)