The Role of External Referrals in Hiring: Evidence from Judicial Law Clerks
53 Pages Posted: 15 Aug 2016 Last revised: 15 May 2017
Date Written: April 30, 2017
We study the influence of external referrals in the hiring process by estimating a discrete choice hiring model that treats applicants as a differentiated products. We posit that referrals can provide better information about the same attributes of an applicant as a public signal, and hypothesize that referrals aid the hiring process by reducing the extent to which organizations need to rely on public signals. We find empirical support for our hypothesis in the context of Supreme Court law clerks using a rare data set that identifies all potential applicants and establishes ties between the hiring managers and applicants' referrals.
Keywords: Hiring, Referrals, Statistical Discrimination, Discrete Choice Model
JEL Classification: M51, J71, J24, I24, D21, D83, D85
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