Referral hiring and wage formation in a market with adverse selection

• 成果类型: Article
• 署名作者: Dariel, Aurelie; Riedl, Arno; Siegenthaler, Simon
• 署名单位: New York University; New York University Abu Dhabi; Maastricht University; Maastricht University; University of Texas System; University of Texas Dallas
• 刊物名称: GAMES AND ECONOMIC BEHAVIOR
• ISSN/ISSBN: 0899-8256
• DOI: 10.1016/j.geb.2021.08.005
• 发表日期: 2021
• 页码: 109-130
• 关键词: Adverse selection; wage formation; asymmetric information; Referral hiring; Social links

摘要

The widespread use of employee referrals raises questions regarding how they affect labor market outcomes. Does referral hiring lead to a more efficient allocation of workers compared to when hiring is possible only on a competitive market? To utilize the social links of their employees, are employers willing to pay a wage premium? We develop a model and provide results from a laboratory experiment to address these questions. We find that employers often hire via referrals, which in turn mitigates adverse selection and elevates wages. Importantly, employers anticipate the future value of hiring high-productivity employees-which consists of gaining access to valuable social links-and are thus willing to take the risk of offering wage premiums when hiring on the competitive market. We also find that employers' risk aversion and the dynamic nature of the hiring process can help account for the inefficiency remaining in the labor market. (c) 2021 The Author(s). Published by Elsevier Inc. This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/).