Referral and Job Performance: Evidence from the Ghana Colonial Army

41 Pages Posted: 8 Sep 2009

See all articles by Marcel Fafchamps

Marcel Fafchamps

Stanford University - Freeman Spogli Institute for International Studies

Alexander Moradi

University of Sussex - Department of Economics

Date Written: August 2009

Abstract

As formalized by Montgomery (1991), referral by employees improves efficiency if the unobserved quality of a new worker is higher than that of unrefereed workers. Using data compiled from army archives, we test whether the referral system in use in the British colonial army in Ghana served to improve the unobserved quality of new recruits. We find that it did not: referred recruits were more likely than unreferred recruits to desert or be dismissed as 'inefficient' or 'unfit'. We find instead evidence of referee opportunism. The fact that referred recruits have better observed characteristics at the time of recruitment suggests that army recruiters may have been aware of this problem.

Keywords: employee referral, hidden attributes, worker productivity

JEL Classification: J63, N47, O15

Suggested Citation

Fafchamps, Marcel and Moradi, Alexander, Referral and Job Performance: Evidence from the Ghana Colonial Army (August 2009). CEPR Discussion Paper No. DP7408, Available at SSRN: https://ssrn.com/abstract=1469907

Marcel Fafchamps (Contact Author)

Stanford University - Freeman Spogli Institute for International Studies ( email )

Stanford, CA 94305
United States

Alexander Moradi

University of Sussex - Department of Economics ( email )

School of Social Sciences & Cultural Studies
Falmer, Brighton, BN1 9QN
United Kingdom

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