This is a past event. Its details are archived for historical purposes.
The contact information may no longer be valid.
Please visit our current events listings to look for similar events by title, location, or venue.
Thursday, September 12, 2019 at 11:40am to 1:10pm
Uris Hall, 498
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.